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First energy price insurance company established in Vietnam
The Vietnam Development and Investment Banking Insuring Ltd., Co (BIC) and Ginga Vietnam Holdings Pte. Ltd have signed a regulation contract to establish BIDV Energy Service and Trade Ltd., Co (BEST).
This is the first company to ensure energy price in Vietnam. BEST will have an initial chartered capital of 1 million USD, including 51 percent by BIC and 49 percent by Ginga Vietnam Holdings Pte. Ltd. After one year of operating, the figure is scheduled to rise to about 2 million USD.
According to Mr. Pham Quang Tung, Director of BIC, this will be a senior derivative financial product and a high risk business activity.
Mr. Tung affirmed that while the Government is removing price subsidies on petroleum and oil, without measures to control risks when petroleum and oil are imported under international general rules after loss compensation supporting domestic prices ends, business will have to suffer huge damages.
The country consumes nearly 12 million tonnes of petroleum and oil each year with annual growth of 8-15 percent from now to 2025. As scheduled, the country will still buy almost all its energy products for two to three years.
Lacking measures to control the floating import price, the country will incur huge import costs under the unstable world petroleum and oil market. Almost all domestic importers lack the ability to control input price.
Even after the Dung Quat oil refinery plant begins operation in early 2009, the country will have to import at least half of its total petroleum and oil output to meet domestic demand.
Under the petroleum and oil price paddling, Vietnam Petroleum and Oil Corporation (Petrolimex) asked the Ministry of Industry and Commerce and the Ministry of Finance to introduce some solutions to stabilize the petroleum and oil market.
Apart from establishing stabilization funds in businesses, Petrolimex also proposed risk management solutions and the use of hedging tools on price, transport and delivery.
VNN
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