VietNamNet Bridge - Local authorities have asked for state financial support of $1 billion for oil refinery projects, but the amount of money goes far beyond the state budget capability.

 

 

The call for financial support has been made by local authorities in three provinces which have granted investment licenses to four mega-projects.

The four projects include three oil refineries - the Vung Ro refinery in Nam Phu Yen EZ of Phu Yen Province, the Nhon Hoi Refinery in Nhon Hoi EZ in Binh Dinh Province, and the Dung Quat refinery expansion. The remaining is the thermal power plant Semcorp.

The local authorities have successfully attracted big investors to their localities but now lack money for site clearance.

According to MPI, local authorities have asked for financial support of trillions of dong for each project.

Under the Prime Minister’s Decision No 126 in 2009, large projects with capital of over VND20 trillion in coastal EZs or difficult areas can receive financial support from the State for infrastructure development.

As the amount of money asked by local authorities is beyond the state budget capability, MPI has asked the head of the National Steering Committee on IZ and EZ Development to help the provinces look for alternative solutions.

The ministry suggests that investors should advance their own money to compensate for site clearance. 

The amount of money would be deducted from the land rent that investors have to pay to the state. 

If the amount needed for site clearance is higher than the rents to be paid, the extra money would be counted as toward the projects’ investment capital.

The investors might be asked to pay the VAT and contractor tax in advance, and the money from the payment could be spent on site clearance work.

Of the four projects, Nhon Hoi Oil Refinery project is the most controversial. This is the largest-ever foreign-invested project in Vietnam with capital of $22 billion, which could increase to $30 billion after 10 years of operation.

The government has agreed to offer many investment incentives to PTT Group, the investor from Thailand, including a 10 percent corporate income tax exemption for the life of the project (30 years) and a 50 percent reduction in other kinds of tax.

The second largest is the Vung Ro Oil Refinery, capitalized at $3.2 billion and developed by British Technostar Management Ltd.

Pham Huyen