'We need around $2.5 billion to import materials every year so the incentives are good for us'.
Long-await incentives for Vietnam’s first-ever petrochemical complex have been released.
The $4.2 billion Thai-backed petrochemical complex has been delayed for more than two years since its major stakeholder SCG could not arrange financial sources because their proposed incentives had not been approved by the Vietnamese government.
According to a Ministry of Industry and Trade source, the major approved incentives for the southern Ba Ria-Vung Tau province-based Long Son Petrochemical Joint Venture Company would be exemption from raw material imports in the first 30 years of operation for propane, butane, naphtha, industrial salt and coal and the application of a 3 per cent tax rate for special products such as polypropylene, polyethylene, viycloruamonome for 10 years.
These imports are essential raw materials the petrochemical complex will need for its operations.
However, the joint venture company will have to seek dollars to pay its imports without Vietnamese government’s guarantees.
A source from the joint venture company, made up by PetroVietnam (18 per cent), the Vietnam National Chemical Corporation (11 per cent), and two subsidiaries of SCG - SCG Vina SCG Chemical Company and the Thai Plastic and Chemicals Public Company together with 71 per cent, said: “We need around $2.5 billion to import materials every year so the incentives are good for us. Being the first petrochemical complex in Vietnam we should have received the highest incentives from the government, in order to be competitive in a tougher market.”
The source, however, said more favourable incentives had been given to the Nghi Son refinery, located in central Thanh Hoa province and invested by a consortium led by PetroVietnam, Kuwait Petroleum International, Japan’s Idemitsu Kosan and Mitsui Chemicals.
According to PetroVietnam, Japan Bank for International Cooperation and Korea’s Export Import Bank and Trade Insurance Corporation were studying to provide loans to the Long Son petrochemical complex project.
The joint venture company source also said that negotiations were still underway to transfer stakes from SCG to Qatar Petroleum International (25 per cent) and Japan’s Itochu (5 per cent).
The Long Son petrochemical complex will be built in the Long Son Industrial Zone in Vung Tau city, about 125 kilometres north of Ho Chi Minh City. The Long Son, which received an investment certificate in 2008, is considered one of the most strategic projects in Vietnam’s oil and gas industry, together with Dung Quat and Nghi Son refineries.
The complex will be able to supply domestic and international markets with around four million tonnes of different kinds of petrochemical products per year.
The development of the complex will be implemented in two separate phases. The construction of the first phase is expected to start before the end of this year, while the the second one will start in early 2013.