Projects post $1.13 billion in losses

Tuesday, Oct 13, 2020 10:37

The Thai Nguyen Iron and Steel Corporation project - one of 12 loss-making projects under the management of the Ministry of Industry and Trade. — VNA/VNS Photo Hoang Nguyen

Twelve loss-making projects under the Ministry of Industry and Trade (MoIT) have posted accumulated losses of VND26.3 trillion (US$1.13 billion).

The Government’s report to National Assembly’s deputies has released updates about the 12 loss-making projects.

The report said the financial situation of the projects was still gloomy in the first half of the year as stockholder equity was minus VND7.2 trillion. Their total was VND59.1 trillion with total liabilities of VND63.3 trillion.

It added that figures about the economic losses to the State caused by the 12 projects are still unclear. This was because of the disputes and problems in engineering-procurement-construction (EPC) contracts in five out of 12 projects including DAP No 2 Lao Cai, Ninh Binh Fertiliser, Ha Bac Fertiliser, Dung Quat Shipyard Company and Thai Nguyen Iron and Steel Corporation (TISCO). The final settlement and exact valuation of the projects have not been completed.

To solve difficulties in the projects and manufacturing industries such as steel, fertiliser and fibre, the ministry has used trade defence tools. This helps projects such as DAP fertiliser factory No 1 in Hai Phong, Viet Nam - China Steel Company, Thai Nguyen Iron and Steel Corporation keep their market shares and improve the business situation.

However, the Phuong Nam Pulp Plant (Vinapaco) project, capitalised at VND3 trillion, has seen more complex issues as it cannot find buyers.

In 2017, Vinapaco, the project’s investor organised the first auction, but it failed. After the failure, the company conducted the second asset and inventory valuation.

As of December 31, last year total liabilities of the project had reached VND3 trillion.

The problems of the projects also have relations with a lawsuit between PVComBank and Vinapaco, under which the former has sued the latter and asked for payment of VND592.3 billion.

Currently, Vinapaco is facing financial difficulties and cannot guarantee to pay the principal and interest. This lawsuit may result in the project's assets and inventories unable to be auctioned under the direction of the Government. The MoIT is assisting PVcomBank and Vinapaco to review and negotiate a settlement.

The 12 loss-making projects are Dinh Vu Polyester Fibre Plant, Dung Quat Bio-Ethanol Plant, Phase 2 of Thai Nguyen Iron and Steel Corporation’s (TISCO), Phuong Nam Paper Mill, Ninh Binh Fertiliser Plant, Ha Bac Fertiliser, DAP Fertiliser 1 Lao Cai, DAP Fertiliser 2 Hai Phong, Binh Phuoc Ethanol, Phu Tho Ethanol, Dung Quat Shipyard and Viet Nam - China Steel Company.

The total initial investment of these projects was nearly VND43.7 trillion and was later adjusted to more than VND63.6 trillion (up nearly 46 per cent). — VNS

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