Nghi Son oil refinery operators will be compensated VND 8,247 billion (US$338.1 million) for variations in the price they were permitted to sell their petrol products and the price of the same products imported, Tuoi Tre is reporting.
Key points:
- Vietnam’s state-owned Petrovietnam (PVN) is required to buy all of Nghi Son’s outputs at the import price, including import tariffs based on most favoured nation tariffs (20 percent), plus an additional 7 percent;
- However, the South Korea-Vietnam Free Trade Agreement reduced import tariffs on Korean petroleum products to 5 percent extending the 7 percent difference to 22 percent;
- Part of the agreement with Nghi Son is that when this happens, the refinery will be compensated the difference by the government; and
- In this case that amounts to US$338 million.
A few additional notes
- Investors from Kuwait Petroleum International, which has a 35.1 percent stake in the refinery were in the country last week meeting with the local managers;
- It was suggested last year that the refinery was on track to report a loss of US$1 billion for 2023; and
- Retail petrol prices are set by the government and have been known to drop below cost price.