PetroVietnam secures $1 billion loan to develop Dung Quat oil refinery27 September 2010
PetroVietnam Group has obtained $1 billion in financing from government bond proceeds and BNP Paribas for the Dung Quat oil refinery in Vietnam.
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. PetroVietnam will borrow the bond proceeds for a 16-year term at a fixed interest rate of 3.6%, following four year's grace. BNP Paribas is extending credit for the deal through 2020 at an annual interest rate of 3.3%, following a 4 year grace period The ministry has authorized 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% production capacity in August 2010. 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 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.