Deputy Prime Minister Le Minh Khai has just signed Decision 1743 on behalf of the Prime Minister, on the allocation of the 2023 State budget estimate for financial settlement costs to the Vietnam Oil and Gas Group (PVN) when paying price compensation in the product consumption of the Nghi Son oil refinery and petrochemical complex project. The Decision was issued on December 30, 2023.
Specifically, the decision to assign the central budget revenue and expenditure estimates for 2023 (other development investment expenditures of the central budget) to PVN in the amount of VND 8,247 billion to handle PVN's finances when paying the price compensation in the product consumption of the Nghi Son Refinery and Petrochemical Complex Project in the period of 2018 - 2023.
The Ministry of Finance is responsible for the contents and data of the proposed report.
Nghi Son Oil Refinery is about to receive more than 8,240 billion VND in price compensation
The settlement of actual data arising is in accordance with the provisions of the State Budget Law and relevant laws. The Decision also clearly states that PVN is responsible for the accuracy of data, report content and fully implements the recommendations of the state audit related to issues affecting the results of the implementation of the offtake chain affecting the amount of settlement of price compensation costs.
This compensation amount was decided by the National Assembly in November 2023, taken from the central budget's development investment expenditure source in 2023. At the end of last year, the National Assembly considered the compensation amount for Nghi Son oil refinery, including the remaining debt of the 2018-2023 period of VND8,247 billion and the amount arising in 2024 of about VND9,653 billion. However, after that, this agency only decided to spend VND9,650 billion and asked the Government to review the data.
Nghi Son Refinery and Petrochemical Complex is a joint venture with a total investment of 9 billion USD, a capacity of 10 million tons of oil/year, and has officially been put into commercial operation since December 2018. The investor includes PVN with more than 25% of the capital, the rest are foreign investors such as Kuwait Petroleum International and Idemitsu Kosan Company...
According to the joint venture agreement, Nghi Son is allowed to sell products at the factory gate at wholesale prices equal to import prices, with a 7% markup added to the selling price for gasoline and oil, and 3% for petrochemicals...
In 10 years (until 2028), if Vietnam reduces import tax to a lower level than the preferential level, PVN will be responsible for compensating the above difference, which is estimated to be up to billions of USD. By the end of 2020, Nghi Son Refinery had accumulated losses of 61,200 billion VND.
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