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Call for Dung Quat revenue target to be cut

Released at: 09:37, 12/11/2014

Call for Dung Quat revenue target to be cut

Quang Ngai province has sought a reduction in the revenue target for Dung Quat Oil Refinery.

by Minh Tien

Quang Ngai province has submitted a proposal to the Ministry of Finance (MoF) for a cut in Dung Quat Oil Refinery’s targeted annual revenue and an increase in taxes on fuel imports to avoid any revenue reduction.

The proposal was based on an evaluation that the goal of Dung Quat achieving annual revenue of VND28.6 trillion (nearly $1.35 billion) for 2015 was not feasible as prices of oil and gas are declining sharply and are now 25 per cent lower than in mid-2014, said Mr. Le Viet Chu, Chairman of the Provincial People’s Committee. Moreover, the figure is VND2 trillion (nearly $100 million) higher than the initial estimate for annual production in 2015. Explaining the province’s proposal, Mr. Chu complained that the goal makes it very difficult for Quang Ngai province to generate accurate socio-economic development indicators such as industrial production value and gross domestic product of the province for the coming year.

In order to achieve annual revenue of VND28.6 trillion, Dung Quat will have to reach total production output of 6.6 million tons by operating at 112 percent of its designed capacity. Mr. Nguyen Hoai Giang, Chairman of the Board of Directors at Binh Son Refinery and Petrochemical Ltd. (which operates Dung Quat), said that the maximum operating capacity should not be higher than 105 per cent of the designed capacity. From 2010 to 2013 the refinery produced approximately 23.4 million tons - an annual average of 5.8 million tons. According to the production plan Binh Son submitted to the National Oil and Gas Group (PetroVietnam), expected production for 2015 should only be 5.7 million tons.

Under these circumstance, besides lowering the target for Dung Quat Oil Refinery, Quang Ngai province has also proposed MoF increase tax rates on gasoline imports in order to increase this year’s annual revenue for the refinery.

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