Circular No. 141/2010/TT-BTC guides the re-lending and repayment of loan principal raised by the Ministry of Finance for the Dung Quat Oil Refinery Project No. 1.

CIRCULAR

Guidelines for the re-lending and repayment of loan principal raised by the Ministry of Finance for the Dung Quat Oil Refinery Project No. 1 for the Dung Quat Oil Refinery Number 1 project

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 134/2005/NĐ-CP dated November 1, 2005 of the Government on the issuance of the Regulation on Loan Management and Foreign Debt Repayment;

Pursuant to Decision No. 546/QĐ-TTg dated June 17, 2005 of the Prime Minister on adjusting the Dung Quat Oil Refinery Project No. 1 investment project;

Implementing the guidance of the Prime Minister in Circular No. 2951/VPCP-KTTH dated June 1, 2006 on arranging a capital of 1 billion US dollars for the Dung Quat Oil Refinery Project No. 1;
The Ministry of Finance guides the re-lending and repayment of loan principal raised by the Ministry of Finance for the Dung Quat Oil Refinery Project No. 1 (hereinafter referred to as the Project) of the Vietnam Oil and Gas Group (hereinafter referred to as the Borrower) as follows:

Article 1. Source of funds raised

1. The source of funds raised for the Project has a value of 1 billion USD, including:

a) 700 million USD from the issuance of international government bonds maturing in January 2020, with an interest rate at the time of issuance of 6.95% per annum, nominal interest rate of 6.75%/year, paid every six months; principal repaid once upon maturity;

b) 300 million USD borrowed from BNP Paribas Bank, term 13 years, from January 30, 2007 to January 29, 2009 at floating interest rate LIBOR + 2%/year, from January 30, 2009 at fixed interest rate of 3.3% per year; principal and interest paid every six months, grace period for principal repayment is three years.

2. The source of funds raised as stipulated in Clause 1, this Article shall be recorded as revenue and expenditure in the state budget for the re-lending amount (hereinafter referred to as the Re-lending Amount) and the Borrower is responsible for repaying the principal and other interest according to the provisions of this Circular.

Article 2. Re-lending Agency

1. The Vietnam Development Bank is authorized by the Ministry of Finance to act as the Re-lending Agency. The Ministry of Finance will sign a mandate contract with the Vietnam Development Bank to implement re-lending in accordance with current regulations on re-lending of foreign government loans and the provisions of this Circular.

2. The Re-lending Agency is responsible for supervising the use of loan funds in accordance with the Prime Minister's investment decision and the feasibility report approved by the competent authority, and recovering debts from the Borrower to repay the Ministry of Finance according to the provisions of this Circular.

3. Management fee of the Re-lending Agency:

a) The Re-lending Agency is entitled to a management fee of 0.05% per annum calculated based on the average outstanding loan balance of the Project for the year;

b) The management fee shall be granted in Vietnamese Dong (according to the exchange rate for foreign currency accounting announced by the Ministry of Finance at the time of grant) from the State Budget within the annual supplementary budget for interest rate differential and management fee according to the request of the Re-lending Agency.

Article 3. Conditions for re-lending

1. The term of re-lending is 16 years from the date of receipt of the first loan, including a grace period of 4 years for principal repayment.

2. The currency for re-lending and repayment of principal and interest is US Dollar (USD).

3. Interest rate for re-lending:

a) The re-lending interest rate is 3.6% per annum and remains unchanged throughout the loan term of the Project;

b) The overdue interest rate is equal to the interest rate of the 2010 international government bond issuance of the Government plus 1.2%.

Article 4. Repayment of Principal and Interest for Rescheduled Loan.

1. The payment of interest shall be carried out quarterly in accordance with specific provisions set forth in the Credit Contract signed between the Rescheduling Lender and the Borrower.

2. After the grace period, repayment of principal shall be made quarterly at the same time as interest repayment according to the specific provisions stipulated in the Credit Contract signed between the Rescheduling Lender and the Borrower.

3. Upon maturity of the loan, if the Borrower fails to repay the debt (including both principal and interest), the Rescheduling Lender shall immediately transfer the entire amount of due but unpaid debt to overdue debt from the day following the due date and apply the interest rate for overdue debt as specified in Subparagraph b, Clause 3, Article 3 of this Circular.

Article 5. Payment Guarantee and Compensation for Rescheduled Loan:

1. The Borrower may use credit guarantee when borrowing from the Rescheduling Lender.

2. The highest priority claim on the Borrower's obligations to be settled belongs to the Rescheduled Loan. At any given time, if the Borrower has due obligations, the obligations under this Rescheduled Loan shall be settled first.

3. In case the Borrower fails to fulfill its obligations, the Ministry of Finance, through the Rescheduling Lender, shall require the Borrower to compensate in accordance with the law, including requesting all banks to freeze the Borrower's accounts to repay the debt.

Article 6. Recovery of Rescheduled Loans

1. The Borrower is responsible for balancing sources of funds to repay loans in accordance with the signed Credit Contract.

2. In case of inability to repay the debt on time, the Borrower must report to the Ministry of Finance and the Rescheduling Lender one month before the due date regarding financial status, inability to repay on time, and proposed solutions.

3. Within the latest three working days after recovering the principal, interest, and overdue interest, the Rescheduling Lender is responsible for transferring the entire recovered amount of principal and interest of the Rescheduled Loan back to the Debt Repayment Reserve Fund as directed by the Ministry of Finance.

Article 7. Payment of Fees, Interest, and Repayment of Principal for Foreign Creditors

1. The Ministry of Finance directly pays all fees related to raising capital for the Project from the State Budget.

2. Payment of interest and repayment of principal:

a) For the $700 million from international bond issuance: The Ministry of Finance authorizes Citigroup Trust Agency in New York to handle the payment.

b) For the $300 million loan from BNP Paribas Bank: The Ministry of Finance directly handles the payment of principal and interest of the loan.

3. Sources for payment of interest and repayment of principal include:

a) Recovered principal and interest at an annual interest rate of 3.6% from the Borrower. All recovered amounts from the Borrower (including principal and interest) are deposited into the Debt Repayment Reserve Fund and tracked separately.

b) Funds from the State Budget to cover the difference between the interest rate paid to foreign creditors and the 3.6% annual interest rate received from the Borrower.

4. Payment of interest and repayment of principal to foreign creditors shall be conducted as follows:

a) When the due date for repayment to foreign creditors (principal and interest) arrives, the Ministry of Finance shall allocate funds from the State Budget to repay the debt.

b) The Debt Repayment Reserve Fund is responsible for reimbursing the State Budget for the allocated funds used to repay foreign creditors corresponding to the recovered principal and interest from the Borrower.

Article 8. Ensuring Payment Capacity

1. The Ministry of Finance ensures sufficient resources to pay foreign creditors upon maturity. If the recovered funds from the Borrower are insufficient to settle the debt, the Central Government Budget will allocate the shortfall. Any surplus recovered funds from the Borrower will be settled and transferred to the Central Government Budget.

2. The Ministry of Finance decides on measures to allocate funds to ensure the ability to repay loans upon maturity.

Article 9. Responsibilities of the Borrower

1. Sign a credit agreement with the Re-lending Agency in accordance with the conditions and terms stipulated in this Circular.

2. Repay the re-lent amount to the Re-lending Agency according to the agreements in the credit agreement and the provisions of this Circular.

3. Bear legal responsibility for the use of the re-lent amount in accordance with the approved project objectives by the Prime Minister.

4. Implement periodic reports as prescribed in Article 12 of this Circular.

Article 10. Responsibilities of the Re-lending Agency

1. Sign a credit agreement with the Borrower in accordance with the conditions and terms stipulated in this Circular.

2. Supervise the use of borrowed funds by the Borrower to ensure compliance with the intended purpose, regulations, and timely recovery of principal and interest on the re-lent amount.

3. Transfer recovered debts from the Borrower to the Accumulation Fund Account of the Ministry of Finance within the specified time limit.

4. Report to the Ministry of Finance on the actual use of funds by the Borrower, debt recovery status, and any issues arising during the execution of assigned tasks.

5. Develop and report to the Ministry of Finance a plan for compensating management fees for the re-lent amount for the Ministry of Finance's consideration and allocation in the state budget estimate.

Article 11. Responsibilities of the Ministry of Finance

1. Allocate the budget and fulfill the repayment obligations of principal and interest on foreign bond issuances and loans from foreign commercial banks;

2. Balance the state budget to compensate management fees for the Re-lending Agency;

3. Supervise re-lending, fund utilization, and debt recovery (principal and interest) of the Borrower and the Re-lending Agency.

Article 12. Reporting, Settlement, and Inspection Procedures

1. Reporting and Settlement of the Borrower

a) The Borrower is responsible for implementing financial reporting and settlement procedures as prescribed by the State and this Circular;

b) Quarterly and annually, the Borrower must report to the Ministry of Finance and the Re-lending Agency on the usage and repayment of the re-lent amount.

2. Accounting, Reporting, and Settlement of the Re-lending Agency

a) The Re-lending Agency shall open separate accounts for accounting and tracking the re-lent amount, repayment, and debt recovery of the Project;

b) Quarterly and annually, or upon urgent request, the Re-lending Agency must report to the Ministry of Finance on re-lending, repayment, and debt recovery of the re-lent amount.

3. Inspection by the Ministry of Finance

a) Every six months or upon urgent need, the Ministry of Finance will inspect the re-lending, repayment, and debt recovery activities of the Re-lending Agency;

b) Upon management requirements, the Ministry of Finance will inspect the use of borrowed funds by the Borrower.

Article 13. Implementation Responsibility and Effectiveness

1. This Circular takes effect 45 days from the date of issuance and replaces Decision No. 20/2007/QD-BTC dated March 28, 2007, issued by the Minister of Finance on the Regulation on Mobilization, Lending, and Debt Repayment for the First Dung Quat Oil Refinery Project.

2. The Ministry of Finance, Vietnam Development Bank, and Vietnam Oil and Gas Group are responsible for strictly adhering to the provisions of this Circular.

3. During the implementation of this Circular, if there are difficulties or issues, units are requested to report to the Ministry of Finance for study and resolution./.