Binh Son Refinery (BSR), the operator of Vietnam’s only oil refinery, Dung Quat, was valued at VND72.88 trillion ($3.2 billion) at the end of 2015, with the State holding a 60 per cent stake, according to the Ministry of Industry and Trade.

An affiliate of the Vietnam National Oil and Gas Group (PetroVietnam), BSR is preparing for an initial public offering (IPO) later this year. 

CEO Mr. Tran Ngoc Nguyen said BSR will sell 5-6 per cent of the company’s shares to the public in an IPO scheduled for November.

The operator of the Dung Quat Oil Refinery will also allow its employees to buy a combined 0.07 per cent stake within the year and will look to attract strategic investors next year.

Chairman Mr. Nguyen Hoai Giang told foreign media on June 1 that the Vietnamese Government had recently given permission for BSR to sell more than half of the company to either foreign or domestic strategic investors, giving a potential buyer a controlling stake.

The company had been in talks with Japan’s JX Nippon Oil & Energy Corp., South Korea’s SK Energy Co., and Russia’s Gazprom Neft, among others, but the talks have failed to progress, Mr. Giang said.

Dung Quat Oil Refinery in the central province of Quang Ngai now meets around one-third of Vietnam’s demand for fuel and oil products with an annual capacity of processing 6.5 million tons of crude oil each year.

BSR has a plan to expand capacity at Dung Quat by 30 per cent at a cost of $1.8 billion while reducing production costs due to cheaper oil prices. 

After completing its expansion in 2021, the refinery’s capacity will increase to 8.5 million tons of crude oil per year, meeting up to 60 per cent of local demand.

The country’s demand for oil and petroleum products has increased every year and the volume imported in 2015 rose 18.7 per cent, according to data from the General Department of Customs under the Ministry of Finance.

The $3-billion refinery posted revenue of VND21 trillion ($923 million) in the first quarter of this year, or 33 per cent of its full-year target. 

BSR projected revenue this year at VND62.4 trillion ($2.75 billion), down 17 per cent from 2016 on an expected fall in crude oil prices and shorter production time due to maintenance work.

2016 was viewed as a successful year for BSR, as total revenue reached more than $3.1 billion and it contributed over $483 million to the State budget, exceeding its plan by $88 million. 

Production was estimated at 6.84 million tons and sales at 6.8 million tons.

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.

VN Economic Times

Vietnam’s foreign debt leaped 6.5-fold between 2001 and 2015, with the World Bank, Japan, and the Asian Development Bank (ADB) being its largest creditors, Minister of Finance Dinh Tien Dung told the ongoing National Assembly (NA) session on May 25.

Minister of Finance Dinh Tien Dung

“Public debt is increasing rapidly, primarily because of weaknesses in managing and using loans,” he told the legislature.

Some debtors with government-guaranteed loans also lost their repayment capacity, passing on the burden to the government. He did not elaborate or name any specific State-owned enterprises (SOEs).

Debts owed to the World Bank jumped 11.5-fold in the fourteen-year period, to VND274.2 trillion ($12.08 billion) while those to the ADB and Japan rose 20.3-fold and 6.8-fold to VND151.1 trillion ($6.66 billion) and VND243.9 trillion ($10.74 billion), respectively.

Vietnam took out nearly $36.6 billion in official development assistance (ODA) and preferential loans from foreign creditors in the 2010-2016 period, while disbursing nearly $32.8 billion worth of foreign loans to finance socioeconomic development projects, Minister Dung said.

Between 2010 and 2016, the government raised VND1.27 trillion ($56.25 billion) worth of government bonds at home, representing an increase of 36 per cent each year. The government also provided guarantees totaling VND632.8 trillion ($27.87 billion) in the period while local governments also borrowed VND139 trillion ($6.12 billion).

Vietnam has depended on foreign loans to develop cash-hungry infrastructure and public projects. Hanoi, for instance, is looking to borrow a further VND53 trillion ($2.3 billion) from foreign creditors to develop its urban railway lines.

Minister Dung said the Law on Public Debt Management needs to be amended to include stricter rules on borrowing and on enhancing capital management.

Borrowings to date pushed Vietnam’s public debt to 63.7 per cent of GDP at the end of 2016, up from 62.2 per cent in 2015 and 50.1 per cent in 2011. The NA has put a curb on public debt of 65 per cent of GDP.

At end-2016, government debt and foreign debt stood at 52.6 per cent and 44.3 per cent of GDP, respectively.

The World Bank has forecast that Vietnam’s public debt will climb to 64.4 per cent this year and 64.7 per cent in 2018. The mounting debt will impose a steadily increasing burden on Vietnam’s economy and make it ever harder to cut the budget deficit, the bank said in a report released last year.

Under Vietnamese legislation, public debt includes government debt, foreign debt, government guarantees, and debts owed by local governments, while debts issued by the central bank, SOEs, and other State-run entities are excluded from the tally.

VN Economic Times

The HCM City People’s Committee has instructed relevant authorities to develop software that will allow the public to obtain land-use plans on their mobile phones as a means to avoid the land “fever” that occurs periodically.

Periodic land “fever” has raised land prices in some suburban districts of HCM City.

“The recent land fever in HCM City has occurred because of several reasons and the city needs to respond immediately to stop it,” Le Van Khoa, deputy chairman of the People’s Committee, told a recent meeting to review the phenomenon.

He pointed out four causes for it: a lot of infrastructures was built recently, directly affecting prices of land nearby; media reports about some big plans in Can Gio and Cu Chi districts; last year the city rescinded many public works that had been on paper for many years, preventing people from buying or selling the lands earmarked for the projects, and prices shot up as a result; and speculation.

“We must publicly announce all land-use master plans from commune to district levels and all should be accessible by mobile phone.”

He instructed the Master Plan and Architecture Department in co-operation with districts Thu Duc and 12 to ready the software by the end of this year.

He confirmed that the city did not have any plans to upgrade Nha Be, Binh Chanh and Hoc Mon districts into downtown districts.

“We have the Government’s decision to build Can Gio Bridge to replace the Binh Khanh ferry, but from policy to reality takes a very long time.”

He was implying that people should not buy land thinking the bridge construction would push up land prices.

“The city People’s Committee did not approve the Marina City project in Trung An Commune, Cu Chi District, as was rumoured, not even the road along the river in the commune,” he said.

The People’s Committee has instructed all districts to improve land management and stop people from carving up lands into plots for selling without approval.

It also called on the State Bank of Viet Nam’s HCM City office to instruct all banks to tighten lending to the property sector.

Tat Thanh Cang, deputy secretary of the city Party Committee, said: “The city Party Committee will issue instructions for the real estate market and guide related authorities in making land-related notifications.

“City spokespersons should make official announcements immediately if any problems crop up and not wait for meetings because if we provide accurate information the media will help the public know about them.”

He also agreed to publicise the land use master plan in every commune and district and called on relevant authorities to create favourable conditions for the public to know about it.

“All HCM City socio-economic, urban and infrastructure development must follow the approved master plan.”

The Party Committee would get the police to investigate those who spread rumours to benefit from them. 

VNS