Refinery lands 1b USD loan package

PetroVietnam has obtained 1 billion USD in financing for the Dung Quat
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./.

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Blue chips stave off market dive

A rebound in blue chips in the final minutes of Sept. 23's session on
the HCM Stock Exchange helped saved the market from a steeper decline
and allowed the VN-Index to close off just 0.69 percent to 450.77 points
– after falling to as low as 447 earlier in the day.

Transactions were sluggish throughout most of the session, while decliners outnumbered advancers overall by 184-36.

Ocean Group (OGC) was again the most-active share, with almost 4
million sold. However, the shares plunged by 4.46 percent to end the day
at a price of 34,200 VND (1.75 USD) per share.

On the Hanoi Stock Exchange, the HNX-Index declined by a more dramatic 1.29 percent Sept. 23, closing at 129.83 points.

However, volume rose by 41 percent over the previous day's session to
36.7 million shares, worth 879.6 billion VND (45.1 million USD).

PetroVietnam Construction (PVX) continued to be the most
heavily-traded share nationwide, with almost 4.4 million changing hands,
but PVX closed off by over 2.9 percent to a price of 23,200 VND (1.19
USD) per share.

HCM City Securities Co analysts on
Sept. 23 wrote that investors were still awaiting September inflations
figures as well as the results of the State Bank of Vietnam 's
review of its Circular No 13, which would impose stricter risk
management requirements on commercial banks.

Until investors received more data, they suggested, the market would continue to tread water.

Vu Thanh Tung, who represents an investment fund from the Republic
of Korea in Hanoi , agreed that investors were looking for clearer
signs of economic trends in the final quarter of the year,
particularly regarding inflation, interest rates and foreign exchange
rates, before making investment decisions./.

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Banks to push sustainable projects

Financial institutions must play a more active role in promoting
sustainable hydropower development in the lower Mekong river basin,
the World Wide Fund for Nature (WWF) has said.

Leading
US, European and Asian financial institutions on Sept. 24 attended a
conference co-convened by WWF and other development partners in Bangkok
to highlight the financial, social and environmental risks and
responsibilities of hydropower development on the lower Mekong river.

The meeting will also explore ways to understand and mitigate these risks.

"It is a missed opportunity," said Marc Goichot, sustainable infrastructure senior advisor for WWF Greater Mekong.

" Lower Mekong dam sites were selected in the 1960s and there has not
been a process to review them with the benefit of today's science and
technology."

Currently, there are 11 hydropower dams
proposed for the lower Mekong river, which runs through Laos,
Cambodia, Thailand and Vietnam.

If one of these
dams is built, it will break the lower Mekong's ecosystem
connectivity, which can have a cascade of negative effects.

"Putting a dam on the lower Mekong River will block fish migration
to spawning grounds, collapsing fish stocks," said Michael Simon, head
of the People Infrastructure and Environment Programme of Oxfam
Australia .

"Do lenders want to be associated with
putting the food security of 60 million people in some of the world's
poorest countries at risk?" he added.

Forecasts show the
productivity of lower Mekong fisheries, which is valued up to 7 billion
USD annually, would drop by up to 70 percent by lower Mekong
mainstream dams.

In addition, iconic species such as the
Mekong giant catfish and Mekong dolphin would face likely extinction
if the proposed dams go ahead.

"Hydropower projects can
limit their impact to ecosystem connectivity. For example, a large dam
can be built in the floodplain beside a river channel rather than across
it, or a hydropower project can have no dam at all," said Goichot.

In southern Laos , there is such an alternative being proposed by
the Lao Department of Electricity and semi-state owned French company
CNR (Compagnie Nationale du Rhone)./.

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Vietnam inflation quickens for first time in 6 mths

HANOI - Annual inflation in Vietnam accelerated this month for the first time since March, propelled by an increase in school fees and food costs.

The consumer price index rose 8.92 percent in September from a year earlier -- the biggest annual rise in seven months -- and 1.31 percent from August, government data showed.

The increase ended the cooling trend of the past half year, but economists chalked it up to mostly to one-off factors.

Education costs leapt 15.56 percent in September from the same month last year and 12 percent from August, the data showed. Increases in tuition and fees were behind the rise.

Dragon Capital, a Vietnam-focused fund management company, said education accounted for 0.7 percent, or more than half, of the monthly figure.

"A spike is often seen from this factor in September as children head back to school, though it is usually lower -- since 2005, average inflation for the month has been 0.5 percent," it said in a report ahead of the data.

In addition to education, the central bank's August currency devaluation of 2 percent and the mid-Autumn festival were also contributors, said Matt Hildebrandt, who follows the Vietnamese economy for JP Morgan in Singapore.

He expected monthly increases in inflation to be larger than the "subdued" numbers leading up to September.

"We do caution that there is concern that seasonal flooding later this year and the usual end-of-year holiday demand could put upward pressure on food prices in coming months," he wrote.

Vu Dinh Anh, deputy director of the Finance Ministry's Price and Market Research Institute, said the monthly increase of 1.31 percent was the highest September reading since 1995, adding that higher rice prices had been an important factor.

Food related items have the highest weighting in Vietnam's inflation basket of about 40 percent.

Export floor prices for rice were increased in August and again in September, leading to higher domestic prices in the Mekong Delta, where most of Vietnam's rice is grown.

"It is uncertain whether the CPI will rise at a fast pace in the last three months, as it depends on reaction of the market to this news, and the credit growth rate that the central bank will release at the end of this month," Anh said.

"If credit rises at a faster pace than expected, the inflationary pressures may remain high in the last quarter."

The authorities have been trying to coax commercial banks to lower lending rates, but several factors have been conspiring against the effort and rates remain in the 11-15.5 percent range, according to the State Bank of Vietnam.

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Refinery lands $1 bln loan package

PetroVietnam has obtained US$1 billion in financing for the Dung Quat Oil Refinery, the Ministry of Finance announced Thursday

The Vietnam Development Bank will co-ordinate the financing package, which includes $700 million 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 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 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 in Government bond proceeds to service its debt to French bank Natixis.

If this proposal is approved, the $1 billion 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.

 

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Vietnam to delay 2nd refinery tender till Dec

Photo: Reuters

HANOI - State oil and gas group PetroVietnam will delay announcing the winner of a tender to build the 200,000-bpd Nghi Son refinery until December, the official Vietnam News Agency said in a report.

Several bidders have asked to extend the tender deadline for Vietnam's second such facility by four months so that they can better prepare bidding documents, but PetroVietnam only agreed with a delay by "two months and a half to ensure the project's progress," the report seen on Thursday said.

It was published by the agency's online news distributing arm, Vietnam Plus (www.vietnamplus.vn), quoting the state oil group.

In June, an official of PetroVietnam-run Nghi Son Oil Refinery and Petrochemical Co was quoted in a state media report as saying the firm planned to sign the engineering, procurement and construction contract with the winning bidder in October.

The Vietnam News Agency said so far three consortiums of companies from Japan, France, Italy, South Korea, Spain and Taiwan have submitted bids for the tender. It did not name any firms.

PetroVietnam has been developing the refinery in Nghi Son of the northern province of Thanh Hoa, 215 kilometers south of Hanoi, in a venture with Kuwait Petroleum International, Japan's Idemitsu Kosan Co and Mitsui Chemicals Inc.

Construction of the Nghi Son refinery was initially scheduled to be completed in late 2013. The Vietnam News Agency report said the refinery will start commercial production in 2014, as scheduled. It did not give an exact date.

Last Friday Idemitsu Kosan said it has delayed the projected start of operations of the Nghi Son plant to sometime in 2014, reflecting a slight delay involving a final investment decision by the end of March 2011 from 2010.

Idemitsu Kosan and Kuwait Petroleum International each hold a 35.1 percent stake in the venture, while PetroVietnam owns 25.1 percent and Mitsui Chemicals has the remaining 4.7 percent.

Once operational, the new refinery and 140,000-bpd Dung Quat, Vietnam's first oil refinery, will together meet 80 percent of domestic oil product consumption.

Vietnam aims to be self-sufficient in oil products by 2015, also with the 240,000-bpd Long Son refinery to be built by 2014 in the southern province of Ba Ria-Vung Tau.

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Hanoi to break ground for urban railroad route

Ground will be broken Saturday in Hanoi’s Tu Liem District for the section of Nhon-Hanoi railway station, the capital’s 3rd suburban route.

The 12.5-kilometer route, which will pass through densely populated areas of the capital like the districts of Hoan Kiem, Dong Da, Ba Dinh, and Cau Giay, will meet the burgeoning transport needs of suburban dwellers, encouraging them to use public instead of private transport.

It will take 20 minutes to cover the distance including the time taken for ticketing procedures.

The route will also be linked with other rail and bus routes.

It will have a capacity of 900-1,200 and travel at a maximum speed of 80 kilometers per hour.

There will be four stations in the four-kilometer underground section.

The main depot will be built on a 15.5-hectare area on the road leading to the Hanoi University of Industry.

The VND18 trillion (US$925.5 million) project, funded partly by foreign loans and, will use European underground construction technology, while the tunnels will be built using prefabricated concrete blocks that will not harm houses in the vicinity, Nguy Nhu Nguyen, the head of the project, said.

It is expected to be operational by 2015.

The first train route in Hanoi will run between Ngoc Hoi in the northeast and Nhu Quynh the south, passing through Yen Vien and other downtown areas. The second, from Noi Bai to Thuong Dinh through the downtown area, will be the most vital route. The fourth will run between Dong Anh and Me Linh, connecting other urban railway development projects. The fifth will run between the southern part of West Lake to Lang-Hoa Lac to connect downtown with areas located along the Lang-Hoa Lac corridor.

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