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Deputy PM orders handling of loss-making projects

Update: July, 06/2017 - 09:40
Steel billet is cooled at Lưu Xá Steel Mill, a provider of ingot steel for Thái Nguyên Iron-Cast Steel Plant. — VNA/VNS Photo Trọng Đạt
Viet Nam News

HÀ NỘI – Deputy Prime Minister Vương Đình Huệ has ordered responsible ministries and enterprises to resolutely handle prolonged loss-making projects in line with market mechanisms while reaffirming that the State would not pump money into inefficient projects.

The remarks were made during a meeting between the Ministry of Industry and Trade (MoIT) and relevant State-owned enterprises on Wednesday.

Twelve big-ticket projects under the Ministry of Industry and Trade have recorded total cumulative losses of over VNĐ16 trillion (US$710.4 million) as of the end of 2016. These projects has total investments of over VNĐ63.6 trillion, or roughly $2.8 billion at the current forex rate, with loans accounting for about 75 per cent of this sum.

In late June, the Poliburo issued conclusion and catalogued measures to deal with these unprofitable projects.

Deputy PM Huệ emphasised two objectives when carrying out measures to tackle these projects under the Politburo, of which taking prompt action to deal with the problems faced by these projects while minimising State-owned asset losses; and clarifying the responsibilities of and strictly handling the organisations and individuals connected to these losses.

The measures include selling projects to foreign investors and accepting bankruptcy for heavy loss-making projects.

Under the Politburo’s direction, the responsible ministries must submit the solutions to the competent authorities for approval by the end of this year and put forward action next year. Under the plan, these projects will likely be solved completely by 2020.

The Deputy PM’s view is to “resolutely handle loss-making projects in accordance with market mechanisms while respecting the principle of self-control and self-responsibility of enterprises”.

Huệ also reaffirmed the Government’s standpoint that the State will not provide more capital for inefficient projects.

He highly appreciated efforts made by the Việt Nam Steel Corporation and Việt Nam National Chemical Group in taking measures to restructure the units under their authority.

The Việt Nam Steel Corporation has divested the entire VNĐ1 trillion capital contribution by the State Capital Investment Corporation in Thái Nguyên Cast-Iron and Steel Plant (phase 2) while the Việt Nam National Chemical Group tackled problems faced by four fertiliser plants.

However, Huệ criticised the Việt Nam National Oil and Gas Group (PetroVietnam) for its snail-paced actions in handling ethanol plants and PVTex Đình Vũ Yarn Plant.

According to MoIT’s data, four fertiliser manufacturing plants including Hà Bắc, Ninh Bình, Đình Vũ DPA Plant and Lào Cai DPA Plant have overhauled management and started to reduce production costs and losses.

Meanwhile, three ethanol plants have been still shut down and PetroVietnam is building divestment plans for two ethanol plants in Phú Thọ and Bình Phước. PVTex Đình Vũ Yarn Plant has been ordered to pay VNĐ73 billion to Đình Vũ Industrial Park for electricity, water and infrastructure costs which has resulted in difficulties in restarting the factory or transferring it to other investors.

On a positive note, Lào Cai Cast-Iron Steel Plant has agreed to continue adding capital to invest in the steel rolling line with a capacity of 500,000 tonnes per year. Since March 2017, the factory has started to earn a profit which is projected at VNĐ67 billion in the first half of this year. – VNS

 

 

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