Projects post $1.13 billion in losses

October 13, 2020 - 08:37
The Government’s report to National Assembly’s deputies has released updates about the 12 loss-making projects.


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

HÀ NỘI — Twelve loss-making projects under the Ministry of Industry and Trade (MoIT) have posted accumulated losses of VNĐ26.3 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 VNĐ7.2 trillion. Their total was VNĐ59.1 trillion with total liabilities of VNĐ63.3 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 Lào Cai, Ninh Bình Fertiliser, Hà Bắc Fertiliser, Dung Quất Shipyard Company and Thái Nguyên 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 Hải Phòng, Việt Nam - China Steel Company, Thái Nguyên Iron and Steel Corporation keep their market shares and improve the business situation.

However, the Phương 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 Đình Vũ Polyester Fibre Plant, Dung Quất Bio-Ethanol Plant, Phase 2 of Thái Nguyên Iron and Steel Corporation’s (TISCO), Phương Nam Paper Mill, Ninh Bình Fertiliser Plant, Hà Bắc Fertiliser, DAP Fertiliser 1 Lào Cai, DAP Fertiliser 2 Hải Phòng, Bình Phước Ethanol, Phú Thọ Ethanol, Dung Quất Shipyard and Việt Nam - China Steel Company.

The total initial investment of these projects was nearly VNĐ43.7 trillion and was later adjusted to more than VNĐ63.6 trillion (up nearly 46 per cent). — VNS