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Fibre plant closes due to big losses

Update: October, 20/2015 - 10:10
The Dinh Vu Polyester Fibre Plant in the northern port city of Hai Phong has shut down and faces bankruptcy after only one year of operating due to losses. — Photo tuoitre.vn

HAI PHONG (VNS) — The Dinh Vu Polyester Fibre Plant in the northern port city of Hai Phong has shut down and faces bankruptcy after only one year of operating due to losses.

The plant has the total investment of nearly VND7 trillion (about US$310 million) and planned to use materials from the Dung Quat Oil Refinery Plant to make fibre. PetroVietnam (PVN) owns 75 per cent of the plant.

But since the plant started to operate in May last year, it continuously could not sell its products.

Observation of the Tuoi tre (Youth) newspaper's correspondent showed that the plant's large property did not have anybody in it except for some guards at the gate.

Most of rooms in the plant were locked, and only some workers passed by to maintain equipment.

It was the second time this year the plant had to temporarily closed, according to the newspaper's research. The first time it stopped its work was from January 6 to March 12. The second time was from September 9 and is scheduled to last until the end of this year.

About 1,000 workers of the plant are temporarily out of work.

A spokesperson for the plant told the newspaper that it was because by the end of March this year, the plant suffered a loss of VND1.7 trillion (about $76.5 million).

Reasons for the losses were that expenses were higher than expected.

For instance, it was scheduled to spend about $4.6 million on electricity a year, but in fact the plant spent $12 million on power.

It planned to use $500,000 for chemicals a year, but in fact it needed $11 million.

The plant could not sell its products due to some quality problems, said the speaker.

According to a report from the Ministry of Industry and Trade, the plant produced 32,000 tonnes of products in the first five months this year, but sold only 23,000 tonnes. The plant lost at least VND3.3 million ($140) for each tonne of products.

To improve the plant's condition, PVN proposed the Ministry of Finance and Ministry of Industry and Trade give the plant breaks on taxes and some expenses such as electricity, land and waste water treatment during the next two years.

PVN also proposed the two ministries give preferential treatment on taxes and loans for domestic fibre plants which buy the plant's products.

But the two ministries did not accept the proposal.

To reduce the plant's difficulties in the short term, the Ministry of Industry and Trade sent a document to textile plants and associations asking them to give priority to products of the plant.

But a representative from the ministry said that the plant's financial condition still faced a lot of obstacles and it could go bankrupt. — VNS

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