$3.2 billion Vung Ro Refinery and Petrochemical project warned over long delay
$3.2 billion Vung Ro Refinery and Petrochemical project warned over long delay
The Phu Yen People’s Committee issued a warning to stop the project on Vung Ro Refinery and Petrochemical complex if the developer does not resume implementation.
On July 19, 2017, Chairman of the Phu Yen People’s Committee Hoang Van Tra sent a document to the provincial Department of Planning and Investment to urge the implementation of big projects in the province. Accordingly, the project on Vung Ro complex was put under a warning status.
In particular, at the end of May 2017, the committee had a meeting with Vung Ro Petroleum Company Limited, the developer of the Vung Ro project. The developer committed that by July 7, 2017, it would publicise an official report about the project as required by the local authorities, including its restructuring plans of human resources, sources of funding and financial plan for the project, the project’s detailed plan and schedule for construction, as well as its legal commitment to sticking to the plans and penalties for failure to follow commitments.
However, when Tra sent the document to urge the implementation of big projects in the province, Vung Ro’s investor has not released its report. Thus, in the document, the chairman required the Phu Yen Department of Planning and Investment to urge it to do good on its commitments before July 31, 2017.
“If the developer fails to release its official report on time or refuse to deal with the Phu Yen People’s Committee about project implementation as it had committed, the committee will report to related agencies to stop the project,” the document said.
The Vung Ro project was granted an investment certificate in 2008, with a total investment capital sum of nearly $3.2 billion and annual capacity of eight million tonnes of crude oil.
The refinery is going to be constructed on an area of 538 hectares. Of the total, 404ha will be used for the construction of the refinery, and 134ha, excluding the areas of sea encroachment, will be used for the construction of Bai Goc Seaport. Besides, this project is allowed to use 500-1,300ha of sea surface area.
However, after nearly ten years, Vung Ro has not been implemented. In 2014, Vung Ro Petroleum held the ground-breaking ceremony for the refinery, but up till now it has not started construction.
After ten years and a ceremony to start construction, the project has been lying idle. One of the reasons identified by experts is difficult site clearance. Another reason is the weakening Russian rouble, which increased the costs of implementing the project.
Technostar Management Limited, which set up Vung Ro Petroleum to implement the refinery project, is headquartered in the UK, but is owned by a group of Russian investors.
The local authorities have put high expectations on the Vung Ro project. The complex was slated to start commercial operations by 2016 and will produce a wide range of products, including gasoline, polypropylene, benzene, toluene, xylene, and diesel. The products will be distributed domestically and exported to foreign markets.
Vung Ro has been known as the biggest foreign invested project thus far in Phu Yen. The investor claimed that once operational, the refinery would contribute more than $110 million per year to the local budget and create more than 1,300 jobs.
