The credit facility for PetroVietnam’s PP plant in the central province of Quang Ngai was provided under the form of an export credit agreement secured by Korea Export Insurance Corporation (KEIC).

The PP plant requires total investment capital of USD234 million of which the value of the engineering-procurement-construction (EPC) contract amounts to nearly USD175 million. The EPC contract has been awarded by PetroVietnam to a consortium of contractors led by Hyundai Engineering.

Bank loans account for 70% of the project’s total investment.

PetroVietnam said the PP manufacturing project has borrowed USD20 million from local commercial banks in April 2009, while the remaining loan worth of USD145.7 million was now arranged by the three above-mentioned foreign banks. The Ministry of Finance will provide guaranty for the loans.

Tae-Youn Chung, deputy president of KEIC, said that the KEIC-covered credit facility played a very important role in the long-term business strategy of his company in Vietnam especially in the partnership with PetroVietnam.

“We see this deal very significant since it will pave the way for us to make a variety of investment projects here. We also see today’s agreement between KEIC and BNP Paribas, Calyon and HSBC along with PetroVietnam a very potential and promising collaboration in the long run in Vietnam,” he told the Daily in an interview prior to the signing.

PetroVietnam’s chief executive officer and general director Phung Dinh Thuc told the signing ceremony in Hanoi on Thursday that to date the national oil and gas group has paid a total of USD134.3 million to the EPC contractors. “The construction of Dung Quat Polypropylene project has so far been 94.38% completed, a little faster than scheduled,” he said. Thuc added that the plant was expected to start trial operation next February before it is handed over to PetroVietnam in June 2010 as scheduled.