Vietnam: Dung Quat greenlighted to set own prices

Vietnam: Dung Quat greenlighted to set own prices

Prime Minister Nguyen Xuan Phuc has issued a decision to license Dung Quat
Oil Refinery, operated by Binh Son Refining and Petrochemical Co., Ltd.
(BSR), to set its own selling prices from January 1, 2017 to enable its
products to compete with foreign imports, according to newswire
Vnexpress.net.

Notably, BSR will be exempt from import taxes on diesel as well as materials
for Jet A1 fuel, a sizeable cut from the initial level of 10 per cent. In
addition, the government will remove the regulatory charges applied for
BSR's products, including liquefied petroleum gas (LPG), oil, and
petrochemical products, consumed in the domestic market. However, the
government will somewhat curb these incentives by adding 3-7 per cent to the
import taxes on BSR's gasoline prices.

Tran Ngoc Nguyen, BSR's general director said that the PM's decision will
help the company enhance its competitiveness. Currently, the refinery meets
40 per cent of the domestic demand, while the remaining 60 per cent is
covered by imports. In this light, the decision will drive domestic
distributors towards using domestic petroleum products.

Nguyen added that increasing the consumption of BSR's products will help
Dung Quat oil refinery reach maximum capacity. BSR expects to pay VND16
trillion ($718.8 million) to the state coffers in 2016. If the refinery's
capacity increases by 10 per cent, BSR will contribute an additional VND1.6
trillion ($71.88 million).

"Being licensed to calculate our own selling price also helps the company
prove its transparency in manufacturing and business, while simultaneously
creating a platform for attracting domestic and foreign investors to BSR's
initial public offering (IPO) at the end of 2017," Nguyen stated.

Earlier in May, BSR asked the Ministry of Finance for permission to
calculate the selling price of petrol on its own because its sales had been
steadily dropping due to a sharp decrease in import tariffs after Vietnam
joined a variety of free trade agreements.

Notably, when the Vietnam-Korea Free Trade Agreement was signed, Vietnam
halved the import tariff on South Korean gasoline products to 10 per cent,

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Ref: http://www.vir.com.vn/dung-quat-greenlighted-to-set-own-prices.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com