According to the MoIT, the government put a high priority on consuming Dung Quat’s products on the domestic market, aiming to decrease dependence on imported petrol as well as the foreign trade deficit.

Thus, the MoIT requested BSR to negotiate with domestic oil and petrol importers and traders to increase their consumption of Dung Quat’s products, circumventing the refinery’s need to export.

Besides, the MoIT requested BSR to compile on solutions to improve its business efficiency to enhance its products’ competitiveness.

In May, BSR asked the Ministry of Finance for permission to calculate the selling price of petrol by themselves because its sales had been steadily dropping due to a sharp decrease in import tariffs after Vietnam joined a variety of free trade agreements, resulting in the removal of tax barriers.

Notably, when the Vietnam-Korea Free Trade Agreement was signed, Vietnam halved the import tariff on South Korean gasoline to 10 per cent, effective December 20, 2015.

Meanwhile, Dung Quat’s products are still subject to an import tax of 20 per cent, forcing a number of its local consumers to switch to other imported sources.

BSR said Dung Quat has to lower its selling price to compete with imported petrol products.

Accordingly, BSR claims it had to reduce the price of petrol by $1 and of diesel by $2.92 a barrel in the domestic market to keep its clientele.

The Ministry of Finance has submitted a proposal to the Government to allow Dung Quat to contribute with only 10 per cent in import taxes to the State budget and to calculate its own selling prices.

Dung Quat Oil Refinery, which began operation in May 2010, was designed to process 6.5 million tonnes of crude oil a year from Bach Ho oil field.

(Source: VIR)