Ministry raises concern over funding for Dung Quat refinery upgrade

Dung Quat Refinery in Quang Ngai Province. Photo courtesy of PetroVietnam

The Ministry of Industry and Trade is concerned about the ability of Dung Quat Refinery operator Binh Son Refining and Petrochemical to mobilize capital for its expansion plan due to low accumulated profit.

The company recorded an accumulated profit of over VND345 billion ($14.45 million) between 2018 and 2020 after it became a joint stock company. According to the company’s plan approved in 2014, this sum was to be attributed to shareholder equity and used for the expansion plan.

But it only accounted for 2.7% of the company’s plan to have over $500 million in shareholders’ equity, and this means the company could face challenges in raising the rest of the sum, the ministry said.

BSR therefore needs to work with financial organizations to ensure it could acquire more loans, it added.

The over $500 million sum accounts for 40% of BSR’s total plan to invest nearly $1.26 billion in upgrading the plant, with the remaining 60% coming from loans.

A company spokesperson, however, said that securing $500 million toward shareholder equity is not a big concern and that it could achieve this goal in this or next year.

BSR posted a profit of over VND6.02 trillion last year, the highest since becoming a joint stock company.

In the first six months, it posted a profit of VND12.4 trillion, the highest ever.

The company has also been working with financial organizations for the remaining 60% and the situation is "very optimistic," he said.

With the trade ministry concerned over the possible challenges in buying crude oil from Russia amid this country’s tension with Ukraine, BSR said it has made plans to source oil from other suppliers should the crisis prolong.

The company, however, cannot reveal details about this plan for now, the spokesperson added.

BSR had earlier proposed it would be eligible for tax incentives, more credit and loan guarantees in its expansion plan to increase production capacity by 16% from the current figure to 171,000 barrels a day.