Prime Minister supports refinery tax cut proposal hinh anh 1A product storage section of Dung Quat oil refinery (Photo: VNA)

Hanoi (VNA) – Prime Minister Nguyen Xuan Phuc has agreed to support a request by Binh Son Refining & Petrochemical Co Ltd (BSR) to adopt a more favourable policy to help its Dung Quat oil refinery compete with imported petroleum products.

At a meeting in Quang Ngai province on August 10 with heads of the company, the PM said he would support BSR’s proposal at the upcoming regular meeting of the Government with the aim of ensuring the effective implementation of market principles and equality among businesses.

Nguyen Hoai Giang, Chairman of BSR, explained that volatility in the global oil market and changeable foreign exchange rates have been putting pressure on the performance of Dung Quat oil refinery.

Giang said the first seven months of this year were a difficult time for oil producers with prices running wild. Specifically, unfavourable tax policies on petroleum products have reduced the competitiveness of Dung Quat Refinery vis-a-vis imported goods, which enjoy preferential tariff rates offered by free trade agreements, he said.

He called on the Government to adopt a more favourable policy enabling a fair competition environment and helping stabilise production and the Dung Quat Refinery and make it more appealing to investors.

This is not the first time BSR has sought approval for a tax reduction due to low competitiveness.

Last April, the Ministry of Finance cut import tariffs on petrol from 35 percent to 20 percent and 30 percent to 20 percent for diesel.

Since the start of its commercial operation in February 2009, Dung Quat Refinery has produced 41.37 million tonnes of petrol products. It has earned a total of 764.63 trillion VND (34.3 billion USD) in revenues and 6.17 trillion in net profits.

In the last seven years, it has contributed nearly 130.2 trillion VND to the State budget.

This year, between January and July, the refinery produced nearly 4 million tonnes of petrol products, taking 40 trillion VND in revenues and nearly 1.1 trillion VND in net profits.

However, the PM stressed the importance of the safe operation of the oil refinery and encouraged the company to improve its corporate governance to reduce cost and enhance the value of petrol and petrochemical products.

In December 2014, the Government approved a 1.8 billion USD plan to upgrade and expand Dung Quat refinery’s capacity from the current 6.5 million tonnes per year to 8.5 million tonnes per year by 2022. Work is scheduled to be completed by 2021.-VNA