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BSR IPO good news for investors

Released at: 20:12, 18/05/2017 What's on

BSR IPO good news for investors

Photo: BSR

This year's IPO of Binh Son Refining and Petrochemical Co. is seen as an attractive deal given the company's many advantages.

by Tue Lam

The Binh Son Refining and Petrochemical Co. (BSR), the operations and management unit of the Dung Quat Oil Refinery in central Quang Ngai province, gained approval on January 1 to determine its price mechanism for imported oil under Government Decision No.1725.

The government has abolished the collection of regulated revenues for BSR’s oil products, liquefied petroleum gas (LPG), and petrochemical products, but in return has also taken away the company’s tax incentives and made the Vietnam National Oil and Gas Group (PetroVietnam) its parent company.

BSR not only has the conditions to improve its competitiveness and lower production and other costs but also to clarify its activities and create conditions to attract domestic and foreign investment.

This decision allows Dung Quat’s petroleum products to compete with imports. In particular, local gasoline distributors are able to use the local currency when purchasing imports, instead of paying in US dollars, as previously. They are therefore no longer at risk from exchange rate fluctuations.

Shortened delivery times and transporting goods to warehouses when buying Dung Quat’s petroleum products will also help distribution businesses limit risks when global prices fall.

With a solid foundation and a leading position in the field of refining and petrochemicals along with a favorable market situation, BSR is currently carrying out its equitization process to prepare finance for strategic investment projects in the future, increasing transparency in corporate governance, and creating value for shareholders.

“We believe BSR’s market expansion strategy in the near future will lay the foundation for sustainable development in the long term, as well as be the premise for long-term cooperation with investors,” said Mr. Tran Ngoc Nguyen, BSR’s CEO. “Its equitization this year will be a good opportunity for investors to jointly develop a petrochemical refining market with potential.”

The expansion project at Dung Quat Oil Refinery is now at the stage of preparing to select EPC contractors, after completion of the overall technical design. Site clearance and compensation is almost done and Quang Ngai province plans to hand over clean ground to BSR to implement the project on June 30.

After completion by the end of 2021, the refinery’s capacity will increase from 6.5 million tons of crude oil per year to 8.5 million tons, meeting up to 60 per cent of local demand.

In applying modern technology, the project will be able to process up to 300 types of crude oil. The price of Dung Quat’s oil products will therefore be very competitive, as it can use cheaper imported crude oil.

Since its official commercial operations began on June 1, 2010, BSR has produced and sold more than 47 million tons of products of all kinds, meeting over 35 per cent of domestic petroleum demand and contributing $7 billion to the State budget. In the past two years, total profit has reached nearly $500 million, with a return on equity of 17 per cent.

In the 2016-2020 period, BSR aims to record production of 28 million tons, of which diesel oil products will account for 50 per cent, with 14.064 million tons, A92/E5 gasoline over 6.383 million tons, and A95 gasoline 4.14 million tons.

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