A view of Binh Son Refining & Petrochemical Co Ltd in central Quang Ngai Province. — Photo baodatviet.vn

HA NOI (Biz Hub) — Prime Minister Nguyen Xuan Phuc has agreed to support a request by Binh Son Refining & Petrochemical Co Ltd (BSR) to adopt a more favorable policy to help its Dung Quat oil refinery compete with imported petroleum products.

At a meeting, in Quang Ngai Province on Wednesday with heads of the company, the Prime Minister said he would support BSR's proposal at next week's regular meeting of the Government with the aim of ensuring the effective implementation of market principles and equality among businesses.

Nguyen Hoai Giang, chairman of BSR, explained that volatility in the global oil market and changeable foreign exchange rates have been putting pressure on the performance of Dung Quat oil refinery.

Giang said the first seven months of this year were a difficult time for oil producers with prices running wild. Specificallly, unfavorable tax policies on petroleum products have reduced the competitiveness of Dung Quat Refinery vis-a-vis imported goods, which enjoy preferential tariff rates offered by free trade agreements, he said.

He called on the Government to adopt a more favorable policy enabling a fair competition environment and helping to stabilise production at the Dung Quat Refinery and make it more appealing to investors.

This is not the first time BSR has sought approval for a tax reduction due to low competitiveness.

Last April, the Ministry of Finance cut import tariffs on petrol from 35 per cent to 20 per cent and 30 per cent to 20 per cent for diesel.

Since the start of its commercial operation in February 2009, Dung Quat Refinery has produced 41.37 tonnes of petrol products. It has earned a total of VND764.63 trillion (US$34.3 billion) in revenues and VND6.17 trillion in net profits.

In the last seven years, it has contributed nearly VND130.2 trillion to the State budget.

This year, between January and July, the refinery produced nearly 4 million tonnes of petrol products, taking VND40 trillion in revenues and nearly VND1.1 trillion in net profits.

However, the Prime Minister stressed the importance of the safe operation of the oil refinery and encouraged the company to improve its corporate governance to reduce cost and enhance the value of petrol and petrochemical products.

In December 2014, the Government approved an $1.8-billion plan to upgrade and expand Dung Quat refinery's capacity from the current 6.5 million tonnes per year to 8.5 million tonnes per year by 2022. Work is scheduled to be completed by 2021. — VNS