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Health of 12 weak projects: NinhBinh Fertiliser Plant still flooded with debt

10:03 | 09/06/2019

VCN- As one of the weakest projects of Vietnam National Chemical Group (Vinachem), NinhBinh Fertilizer Project is at “the point of death” and is trapped in financial difficulties, threatening the "safety" of Vinachem.

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The goal of resolving, operating the plant stably and effectively, then equitizing and divesting in 2020 is difficult to ensure. Photo: Nguyen Thanh.

Close to collapse

NinhBinh Fertiliser Plant is a project that has been handed over temporarily to operate commercial production since September 2012. However, by July 2016, the plant stopped production due to losses and running outof capital. At the same time, during the production process, the factory did not operate stably and oftenhalted for repair and maintenance because of technical problems. By January 1, 2017, although the plant was operating again, the runtime in the whole year was only 139 days. In 2018, the plant only ran for117 days, after being suspendedseven times due to incidents, ofwhich the longest periodwasfrom May 10 to August 22, 2018.

After a long time of fluctuating, according to the latest report of the Ministry of Industry and Trade, the total output of the plant in the first quarter of 2019 reached 115,950 tons of urea and 775 tons of NH3; total consumption reached 76,800 tons of urea and 775 tons of NH3; losses were135.8 billion VND, reducing by 87.2 billion VND compared to the same period in 2018.

Among 12 projects, enterprises with slow progress and inefficiencies in theIndustry and Trade sector, the Ministry stated fertilizer production projects of Vianchem (including NinhBinh FertiliserPlant) continue to face difficulties on capital loans for business and production due to commercial banks providing loans under the method of "total return and partial re-lending" after each production cycle.

Talking about this issue, especially the case of NinhBinh Fertilizer Plant, Nguyen PhuCuong - Chairman of Vinachem's Member Board saidamongVinachem projects, NinhBinh Fertilizer Plant is the most stressful. In the first 3 months of this year, the project operated normally but the runtime was much less than the total time of suspend, causing alarge financial cost. NinhBinhFertilizer Plant is currently unable to borrow money from any bank, itmainly depends on payment advances, then the money is taken to buy coal for production.

"Vinachem's investment in this project is about 6,000 billionVND, while Vinachem's charter capital is only 13,000 billionVND. Currently, Vinachem is paying for all credit contracts that Vinachem borrowed to invest in this project. If this situation continues, not only will NinhBinh Fertilizer Plant collapse, but Vinachem, too. In the near future, it is necessary to impose amoratorium and have solutions on loan contracts with some banks,” Cuong said.

Finalize the EPC Contract dispute

Regarding NinhBinh Fertilizer Plant, at the meeting of the Steering Committee on dealing with the shortcomings and weaknesses of some slow and inefficient projects and enterprises of the Industry and Trade sector, Deputy Prime Minister VuongDinh Hue said "This is the most worrisome project. All solutions are cited in the plan. On that basis, Vinachem can choose the most beneficial solution.”

The Ministry of Industry and Trade said NinhBinh Fertilizer Plant has many difficulties, especially the dispute on the EPC Contract, which has not been solved, so it has not been finalized. In addition, NinhBinh Fertilizer Plant also faces difficulties in cash flow, so it cannot pay for repairing, maintaining and buying spare materials, leading to suspensions that last days and reducing output and sales opportunities. Besides, due to the plant’sdifficulties, many officials and workers left their jobs, causing a shortage of skilled workers.

"If this situation continues,it will be difficult to ensure the goal of handling the project, operating stably and effectively, then equitizing and divesting in 2020 as set out in Decision No. 1468/QD-TTg of September 29, 2007 approving the scheme on settlement of outstanding problems, weakness of some projects, slow and ineffective enterprises in Industry and Trade.”

Regarding the plan to deal with NinhBinh Plant Project, the Government sent a report to the National Assembly members on the situation and the results of dealing with the shortcomings, weakness of some projects, slow and ineffective enterprises in Industry and Trade sector, signed by the Minister of Industry and Trade Tran Tuan Anh on behalf of the Government, authorized by the Prime Minister.It will focus on resolving the EPC Contract dispute in order to finalize the EPC Contract and finalize the entire project.

In case the two parties do not agree to resolve the problems, it is necessary to bring a third party (an arbitration agency) to arbitrate, determine the specific responsibilities of the parties and at the same time conduct investigations and prosecution if there are signs of violation in order to clearly determine the responsibilities of organizations and individuals, especially the responsibility for the loss.

According to the Government, based on the conclusions of the arbitration body on the EPC Contract dispute and the parties' responsibilities in the EPC Contract, the findings of the Investigation Agency on the violation and responsibility for the losses caused by the organization or individual involved in the project, it redefines the value of the project property and equitizeand divests the State capital from the project.

By Thanh Nguyen/ Kieu Oanh