Local petrol distributors are still seeing many disadvantages that are keeping them from buying domestic product from Dung Quat Refinery.
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| The first products of Dung Quat Refinery |
A contract on distribution of petrol from Dung Quat Refinery in 2011 has been signed between Binh Son Oil Refining & Petrochemical Co. Ltd (BSR) and four of the largest domestic petroleum traders after a month-long negotiation chaired by the Ministry of Industry and Trade.
At the signing ceremony, Deputy Director of Vietnam National Petroleum Corporation (Petrolimex) Nguyen Quang Kien said: “Many people say that we local distributors are not willing to buy Dung Quat’s products while preferring imported products. That is simply not true.”
Kien confirmed that Petrolimex has bought approximately 2 million cubic metres of petrol from Dung Quat Refinery and will continue buying their products.
“However, this is causing us some losses,” Kien said. “Signing a contract with Dung Quat means we must put off our contracts with some foreign providers, which causes us risks and losses.”
Distributors for Dung Quat products are also facing unfavorable conditions regarding price. For imported products, the government assigns tariffs based on import prices which follow the inter-bank rate. However, tax on Dung Quat’s products are defined following selling rates of commercial banks. The difference between these two rates now can be much higher than the import price.
Adding to that is the unfavorable weather in Quang Ngai Province with lots of heavy rain. The small port also makes transportation difficult. All these raise the price of Dung Quat’s petrol to higher than that of imported products.
“We are willing to sign a contract with Dung Quat but we need timely and accurate information from the refinery on their production plans and volume to avoid supply interruption,” Kien added. “We will not buy more from Dung Quat except the 2 million cubic metres which has already been agreed to.”
Addressing the worries of distributors, Ho Thi Kim Thoa, Deputy Minsister of Industry and Trade, said, “The difficulties are unavoidable for Dung Quat Refinery during the early stages of operation. Therefore, distributors must abide by the contracts signed with BSR and BSR should be open to ideas and suggestions of distributors to gradually solve them.”
In addition to 2 million cubic metres petrol signed with Dung Quat Refinery, Petrolimex is going to import 7 million cubic metres of petrol in 2011.