Japan’s Mitsui Chemical turns down KIP proposal to drop interest

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KUWAIT CITY, Jan 26: After the initial approval of Kuwait Petroleum International Company on the proposal to drop the interest on partners’ loans to the lowest possible level, down to 0% if necessary in the Vietnam refinery, informed sources revealed that the Japanese partner, Mitsui Chemical Company of Japan, which owns a 4.7 percent stake in the refinery, rejected the proposal.

The same sources said the reasons for the rejection was that it is not possible to obtain internal approvals in the company to waive important contractual rights such as reducing the interest rate on the secondary loan and the completion guarantee loan without there being a viable economic justification or strong justifications for doing this postponement.

The sources indicated that the interest on the partners’ loans in the Vietnam refinery amounts to approximately $4 billion until 2029, of which “International Petroleum’s” share amounts to approximately $1.4 billion.

The refinery company had revealed in a letter sent to the partners at the end of last December that it had discussed reducing interest rates on loans, and in view of the large burden and negative impact of the financing cost (especially the cost of the partners’ loan) on the expected financial performance of the refinery company in 2024 due to the very high-interest rate, it proposed reducing the interest rate. Interest on loans.

It is noteworthy that the Nghi Son refinery is an oil refinery located in Vietnam. It was opened in November 2018. The capacity of the refinery is 200 thousand barrels per day, and the total cost of the refinery project amounted to nine billion dollars, in which Japan’s Idemitsu Kozan and Kuwait Petroleum International Company each own a 35.1 percent stake. While Vietnam Oil and Gas Group owns 25.1 percent, and Japan’s Mitsui Chemicals owns 4.7 percent.

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