11:21 | 16/04/2015 Industry
The Ministry of Finance has confirmed that the country's sole oil processing facility – the Dung Quat Oil Refinery – will not be closed thanks to a recent import tax reduction on petroleum products.
The statement was made at a press briefing held on April 15 following articles in the local press that said the refinery, located in the central province of Quang Ngai, was at risk of closure because its products could not compete with imported goods.
The Binh Son Refining and Petrochemical Co (BSR), which operates and manages Dung Quat, was quoted by local media as saying that the oil refinery may not be able to sell its products and would be forced to close.
The petroleum import tax from ASEAN was cut to 20% from January 1 this year, but products from Dung Quat were still subject to an import tax of 35% for petrol, forcing a number of businesses that bought petroleum from Dung Quat to choose other sources, it said.
At the press briefing, head of the Ministry of Finance's Tax Policy Department, Pham Dinh Thi, said that Vietnam had cut the import tax levied on oil and petroleum products from Tuesday to 20-25% from 30-35% under a recent circular issued by the ministry.
The new circular brought down the import tax on petroleum products to the same as the tariff on petroleum products imported from ASEAN, allowing the refinery to continue operations, he said.
He added that according to the customs sector, oil and petroleum products imported from ASEAN since early this year were still not subject to the special preferential import tariff of 20% because of the lack of proof of origin certificates.
It meant that businesses needed to pay for certificates that proved their products originated from ASEAN in order to enjoy the preferential import tariff, he said.
Concerns that oil and petroleum businesses would buy imported oil and petroleum products instead of those produced by Dung Quat were unreasonable, he added.
At an online exchange held by the Dau Tu (Investment) newspaper on April 15, Deputy Director General of the Vietnam Oil and Gas Group (PetroVietnam) Ninh Van Quynh confirmed that the Dung Quat Oil Refinery would not be closed because it would affect other plants.
PVN has asked relevant ministries to issue better policies on prices and taxes levied on oil and petroleum products in order to help Dung Quat compete with imported products, he said.
Starting commercial operations in 2010, the Dung Quat Oil Refinery has produced over 26 million tonnes of oil, petrol and gas products, meeting 30% of the demand for petrol nationwide.
Its total output in 2014 reached 5.81 million tonnes, earning VND128 trillion (around US$6 billion), equivalent to 120% and 128% of the yearly target, respectively.
Source VOV News