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Can Tho oil refinery project will come true?
The Can Tho Oil Refinery, the fist joint venture between a Vietnamese company and a foreign partner, seems to have found a way out after the US partner unexpectedly withdrew.
In the latest news, after the meeting on December 22, the Can Tho City’s authorities affirmed that they are now ready to allocate 50 hectares of land to the investor and ask for the permission from the Government for the extension of the project implementation.
The Can Tho Oil Refinery project was granted investment license in 2008. The refinery was planned to cover an area of 250 hectares and have the investment capital of $538 million (The Vien Dong Investment and Trade Corporation contributing 30 percent of capital, and the US Semtech Lit 70 percent). The oil refinery was expected to have the capacity of two million tons a year. However, after the US partner decided to withdraw from the joint venture, Vien Dong Company asked for the permission to change the scale of the project. The newly designed project is expected to cover an area of 50 hectares, have the investment capital of $350 million and will have the capacity of one million tons. The oil refinery will churn out A92, A95, diesel, and slight naphtha. The British Vitol has committed to provide crude oil to the project.
How about investor’s financial capability?
According to Deputy Chair of the Can Tho City’s People Committee Nguyen Thanh Son, if only the investor’sfinancial capability was taken into consideration, the committee would have had every reason to revoke the license for the project. However, the city’s authorities still think that it would be better support the continuation of the project,
Just one year after the project was licensed in 2008, the US partner, Semtech, which contributed 70 percent of capital in the joint venture, left. At that time, the Vietnamese partner, Vien Dong Company, called on another foreign investor – Crystal Future – a Taiwanese company which registers its legal entity in Mauritius Republic, to join the project.
However, according to Vo Thanh Sang, Director of the Can Tho City’s Planning and Investment Department, to date, Vien Dong and the new partner still have not formeda joint venture. Therefore, the Can Tho City’s authorities still cannot grant a new investment license. Prior to that, Vien Dong promised that the company and the new foreign partner would submit the necessary registration documents by October 31.
According to Nguyen Van Duc, General Director of Vien Dong Company, Crystal Future and Vien Dong signed a frame contract on the official replacement of the foreign partner over Semtech in the joint venture. However, Crystal Future unexpectedly announced that it will stop operation as of October 15, because the Can Tho City’s authorities have not allocated clear land to implement the project.
Meanwhile, Duc has affirmed that the letter certifying the capital disbursement for the project released by Far East National Bank HCM City Branch is valid until July 7, 2011.
Besides, Duc also believes that necessary capital can be still arranged, because the main contractor of the project, Chinese Sumec Company, agreed that 80 percent of the contract package will be paid in installments? within five years ($120 million)
Who will be in charge of allocating land?
The problem now is how to obtain clear? land to allocate to the investor. Duc believes that Crystal Fortune, as the investor, has reasons to worry about the land, because it cannot anticipate the risks during the site clearance. The Can Tho oil refinery will be located in O Mon Industrial Zone, which has not been created yet.
However, Duc believes that with the commitments by Can Tho City’s leaders made on December 22, he will be able to persuade the investor to come back
Vo Thanh Hung, Head of the Can Tho’s Management Board of Export Processing Zone and Industrial Zone, admitted that the O Mon Industrial Zone project, approved in 2009, has not yet been created. However, he said that the 50 hectares of land reserved for the project has been defined. This means that the investor should not worry about the land, and the thing he needs to do now is to start the site clearance.
vietnamnet, Tuoitrenews
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