The Dung Quất Bio-ethanol Plant in the central province of Quảng Ngãi, one of the 12 loss-making projects being supervised by the State Capital Management Committee. - Photo petrotimes.vn

HÀ NỘI – Deputy Prime Minister Vương Đình Huệ agrees 12 loss-making State-funded enterprises may bring their conflicts with contractors to arbitrators if those conflicts are not resolved by the end of this year.

According to the State Capital Management Committee, main conflicts between those companies and contractors are related to engineering-procurement-construction (EPC) contracts. Seven of the 12 companies have not found a way to resolve the problems while the others will have to ask for the assistance of arbitrators.

The Vietnam Chemical National Group (Vinachem) and the Vietnam Steel Corporation (VNSteel) are two State-owned enterprises that will have to consult arbitrators after their problems with contractors remain unsolved. Meanwhile, the Vietnam National Oil and Gas Group (PetroVietnam) has not reached agreements with contractors to deal with problems in two of its ethanol petrol plants in Phú Thọ and Quảng Ngãi.

“State-owned enterprises should negotiate with contractors first before taking the cases to the referee,” Huệ said at a meeting on Friday.

If negotiations fail, enterprises and projects involved in the cases must report to the State Capital Management Committee and the Ministry of Justice before bringing the cases to the arbitration office, the Deputy PM said.

“Trials to settle the disputes, if any, must be dealt between company and company, not between the Government and company,” he said. “Violations in those projects must be revealed and any individuals and units failing to comply with the law must be punished accordingly.”

Financial problems

The State Capital Management Committee in July received 11 of the 12 loss-making projects from the Ministry of Industry and Trade. Of the 11 projects, six plants had either made profits or cut losses as of 2018 but their performances have been undermined by lack of capital and existing debts.

Vinachem chairman Nguyễn Phú Cường proposed banks continue providing lower loans and charges off existing loans so that the projects are able to keep operating.

He said that Vinachem projects have been re-operated efficiently but difficulties still exist because banks agree to lend back only 10 per cent of the collected debts, leading to a lack of funding for production.

The enterprise has been paying debts for its fertiliser plants in the provinces of Ninh Bình and Bắc Giang since the beginning of the year, Cường said, citing Vinachem has paid VNĐ700 billion (US$30.1 million) worth of debts for its Ninh Bình plant.

According to deputy governor of the State Bank of Vietnam Đặng Thái Sơn, loans for loss-making projects are already the lowest rate compared to others. Meanwhile, charging off existing loans would need special approval of the Government.

Deputy PM Huệ asked the Ministry of Finance and the central bank to help enterprises and their projects continue paying back loans and interest. The capital management committee was asked to submit better solutions to the Government to improve the quality of corporate governance and business operation in those projects.

Huệ also agreed with the committee and enterprises to transform the Việt Nam-China Steel Co Ltd to a joint-stock firm so it can raise capital to enhance business performance.

In addition, the Deputy PM agreed to remove Vinachem’s plant in the northern port city of Hải Phòng from the list of 12 loss-making projects as it has made improvements recently.

Twelve loss-making projects are Đình Vũ Polyester Fibre Plant, Phương Nam Pulp Factory, Thái Nguyên Iron and Steel Joint Stock Corporation, Dung Quất Bio-ethanol Plant, Ninh Bình Fertiliser Plant, Hà Bắc Fertiliser Plant, DAP 1 Lào Cai Fertiliser Plant, DAP Fertiliser 2 Hải Phòng , Ethanol Bình Phước, Ethanol Phú Thọ, Dung Quất Shipyard and the joint venture between Quý Sa and Lào Cai Steel. – VNS