Nghi Son still faces hardship

An anonymous source familiar with the case said the joint venture between Vietnam’s state-run PetroVietnam, Kuwait Petroleum International, Japan’s Idemitsu Kosan and Mitsui Chemicals had failed to receive legal opinions of the Ministry of Justice (MoJ) to certify the legality of the project documents.

Without the MoJ’s legal opinion, the banks would not disburse their pledged loans for the project. A legal opinion issued by the MoJ would mean the Vietnamese government has taken on the role as guarantor for any risks incurred by the project.

The MoJ explained that it had not yet provided a legal opinion to certify the legality of the project documents, because the ministry would only certify 15 documents while the joint venture had asked for the ministry’s legal opinions on 150 documents. Many of these documents are contracts and agreements with other partners of the joint venture that the MoJ refused to provide a legal opinion on.

The MoJ normally only provides legal opinions on infrastructure projects under the build-operate-transfer (BOT) investment model, in accordance with the governmental Decree 108/2009/ND-CP guiding the implementation of BOT, build-transfer-operate and build-transfer investment models.

However, as the Nghi Son oil refinery and petrochemical complex is a vital national project which has received the Vietnamese government’s guarantee, the MoJ agreed to provide legal opinions to the project.

But the ministry confirmed that it would provide legal opinions to 15 documents previously clearly defined. For other documents, it is only willing to provide legal consultancy to the joint venture.

The Nghi Son complex, which received an investment certificate in 2008, would have an annual refining capacity of 10 million tonnes of crude oil. The Japan Bank for International Co-operation and the Export-Import Bank of Korea committed financing of $2.3 billion for the project, while a $2.7 billion sum would be provided by commercial banks, with the remainder from the project’s shareholders.

This is the second oil refinery to be built in Vietnam, following the first in the Dung Quat Economic Zone in the central province of Quang Ngai.

In January, the joint venture signed an engineering, procurement and construction contract with a consortium led by Japan’s JGC Corporation. Construction began on the refinery two months ago and according to the joint venture, the project will start commercial operations in mid-2017.