Oil Refinery, the Ministry of Finance announced on Sept. 23.
The Vietnam Development Bank will co-ordinate the financing package,
which includes 700 million USD from Government bond proceeds and the
remainder from French bank BNP Paribas, which is extending credit for
the deal through 2020 at an annual interest rate of 3.3 percent,
following a four-year grace period.
PetroVietnam
will borrow the bond proceeds for a 16-year term at a fixed interest
rate of 3.6 percent, following four year's grace.
The ministry has authorised Citibank's Trust Agency in New York to
collect interest on the 700 million USD loan made from Government bond
proceeds, while the Ministry of Finance will make interest payments
directly to BNP Paribas.
The financing will be
allocated to the Dung Quat Oil Refinery Plant No 1, which began
operating at 100 percent production capacity last month. The plant has
imported 5.7 million tonnes of crude oil and processed nearly 5 million
tonnes so far, delivering over 4.7 million tonnes of refined products to
market.
In order to ensure repayment, Circular No
114/2010/TT-BTC issued by the ministry late Sept. 23 requires
PetroVietnam to give highest priority to servicing the loans under this
package. If it falls past due, the Ministry of Finance will require
other lenders to freeze existing and further credit to the oil giant.
The ministry is preparing further risk-provision plans
to ensure repayment of the 1 billion USD debt at maturity and is
guaranteeing ultimate repayment from the State budget.
However, following the recent troubles of debt-laden shipbuilder
Vinashin, PetroVietnam was expected to set an example as the best
economic group in Vietnam.
Last week, the
Government instructed the Ministry of Finance to consider Vinashin's
request for 300 million USD in Government bond proceeds to service its
debt to French bank Natixis.
If this proposal is
approved, the 1 billion USD in capital raised by Vietnam's second
overseas sale of Government bonds – offering higher yields than the
lower-rated Philippines and Indonesia – would go to Vinashin and
PetroVietnam.
The bonds were expected to offer a yield of 6.95 percent and a nominal interest rate of 6.75 percent.
The bond sale was originally conceived to provide capital for energy
and infrastructure projects that would support growth in an economy
suffering from a shortage of foreign exchange./.
