Binh Son Refining and Petrochemical JSC needs tax exemptions to overcome the current and upcoming difficulties. View of the firm's Dung Quat Plant in Quang Ngai Province. — Photo courtesy of the firm

Due to the impact of the COVID-19 pandemic and plummeting oil prices, the firm’s H1 revenue and contribution to the State budget was about 40 per cent of the yearly plan or VND3 trillion (US$129.3 million).

Ending the first quarter, BSR posted a record loss of VND2.35 trillion. The company targets total output of 5.56 million tonnes of products for 2020; total revenue of VND80.68 trillion and total post-tax profit of VND1.18 trillion.

The post-tax profit for the whole year is expected to drop nearly 60 per cent on-year as crude prices are expected to trade at $60 a barrel on average this year. Earnings targets can be adjusted upon the movement of oil prices.

According to BSR, the main reason for the loss was that it must buy crude oil in advance according to contracts signed from November to December last year with price formulas based on reference crude oil prices and price surcharges at that time when the Brent oil price was about $65-70 per barrel.

At time it processed and sold the products in Q1, the oil prices fell to their lowest of $13.2 per barrel on April 21, causing huge losses of inventory prices.

At the same time, consumption was affected by social distancing due to COVID-19.

“Therefore, the processing profit of the factory in the first six months is negative,” the firm’s representative said, adding BSR had to consider all options, including a plan to stop production.

After analysis and evaluation, the firm decided to keep the operation of the plant as it could process all crude oil bought at high prices and buy and process the low-price crude oil to gradually restore profitable production and business.

To deal with the current difficulties, BSR proposed that the Government and relevant ministries and agencies develop mechanisms to ensure that petroleum products of its existing Dung Quat oil refinery continue to be consumed in the local market.

It also asked the Government to support the firm with interest-free loans, tax exemption and reduction as well as the preferential policies to ensure efficiency and capital arrangement for the project to upgrade and expand Dung Quat oil refinery.

It also asked for the exemption of environmental protection tax for internal burning fuel for production.

At the same time, BSR asked related ministries and agencies to consider adjusting the pricing method for imported petroleum products to ensure equal competition between domestic and imported sources and to stabilise the petroleum market.

In the middle of June, BSR filed for listing on the Ha Noi Stock Exchange (HNX) with more than 3.1 billion shares, representing its charter capital of VND31 trillion (US$1.34 billion). If approved, BSR will become the largest listed firm by charter capital on HNX.

BSR shares are being traded around VND7,000 a share on the Unlisted Public Company Market (UPCoM) with code BSR. — VNS