Dung Quat Oil Refinery – the lesson for other key projects

The Dung Quat Oil Refinery has operated for six months so it is difficult to appraise its effectiveness right now but according to the government, its shortcomings provide lessons for other national projects.

Minister of Industry and Trade Vu Huy Hoang on November 4 presented a report on the Dung Quat Oil Refinery project before the National Assembly.

The report said that though the construction was nine years behinds schedule and there are some technical errors but it is still a success. Its Shortcomings need to be considered as usefulexperience for them implemention of other key projects.

This refinery began operating on May 30 2010. At this moment, it is running at full capacity, producing quality products.

By the end of September 2010, the plant processed 5.5 million tons of petrol from 6.4 million tons of crude oil. It sold around 5.3 million tons of petrol to the market, earning over 25 trillion dong ($1.31 billion), paying 3 trillion dong to the state budget.

The evaluation report of the National Assembly’s Committee for Science, Technology and Environment also said that after 13 years of construction, the biggest success of this project is that it is running at 100 percent of capacity and makes products that meet the standards of Vietnam and the world.

The plant currently meets around 30 percent of the domestic market’s need for petrol, the report says.

However, the plant has beenoperating for only six months so it isimpossible to assess its economic effectiveness accurately. Briefly speaking, the project has brought positive impacts on the Dung Quat Economic Zone in the central province of Quang Ngai.

The project was nine years behind schedule because the Government didn’t instruct relevant bodies to implement the project urgently? And due to financial difficulties.

The plant is running at its full capacity but some minor technical errors are not yet fixed. Site clearance, resettlement and compensation must continue.

The assessment report also emphasizes that these matters providelessons for Vietnam to better implement other key projects.

The Dung Quat Oil Refinery project was ratified by the National Assembly in December 1997. The plant released the first products on September 22, 2009. The project was checked and taken over on May 29, 2010. Contractor Technip handed over the plant to the investor on May 30 2010.

The total investment capital of this project was estimated at $1.5 billion in 1997. By June 2005, the government raised the capital to $2.501 billion. After that, the investor – the Vietnam Oil and Gas Group – proposed to raise the capital to $3.053 billion. The exact number will be announced in December 2010.

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