August 18, 2019 15:43

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Many loss-making projects have reduced financial pressure by hundreds of billions VND

14:26 | 18/07/2019

VCN - Among 12 loss-making and ineffective projects in the Ministry of Industry and Trade, many projects have had their debts restructured, reducing the financial burden of hundreds of billions of 12 loss-making and ineffective projects.

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many loss making projects have reduced financial pressure by hundreds of billions vnd
Ninh Binh Fertiliser Plant is a typical loss-making project that has been restructured. Photo: Nguyen Thanh

Financial pressure decreased by 310 billion VND / year

According to the latest report of the Ministry of Industry and Trade, among six loss-making factories, two were profitable in 2018.

Among the three previous projects that have stopped production and business, two operate again and one has completed the preparation to restart the factory.

With three unfinished construction projects, Vietnam Paper Corporation has collaborated with consultancy units to review the project and submitted to the Ministry of Industry and Trade for approval to develop plans and implement auction of projects.

In particular, the Phu Tho Biofuel Plant project continues to face difficulties because PVOil is not the main shareholder (accounting for 39.76%), shareholders outside the industry account for more than 60% and not contribute additional capital to implement the Project. The Phase 2 expansion of a plant run by the Thái Nguyên Iron and Steel Corporation has not resolved the dispute of the General Contractor Contract (EPC).

Duong Duy Hung - Director of Planning Department (Ministry of Industry and Trade) said the handling of projects complies with the principles of the market mechanism; which is autonomy and self-responsibility of enterprises. The State does not allocate more capital to projects, and the Government and the Government Steering Committee have directed the successful withdrawal of 1,000 billion VND from the capital contribution of the State Capital Investment Corporation (SCIC) into the project to expand production in phase 2 of Thai Nguyen Iron and Steel Factory.

In a report of the Ministry of Industry and Trade, fertiliser projects of Vietnam Chemical Group with huge debts that make businesses "freeze" were mentioned many times.

The Ministry of Industry and Trade stated that the Ministry of Finance has undertaken direct work, solving a basic step on the problem of handling, restructuring loans and extending the depreciation level in projects and enterprises.

These four projects (including Ninh Binh Nitrogenous Plant project; Ha Bac Nitrogen Fertilizer Plant Renovation project, Project No. 2 DAP Fertiliser Plant - Lao Cai; project of DAP fertiliser factory No. 1-Hai Phong) has been processed to extend depreciation level from 2017-2019. Depending on performance, the companies can reduce financial pressure by 180-310 billion VND/ year.

At the same time, the Ministry of Finance presided over the study and reported to the Government the proposed contents to the National Assembly on amending and supplementing articles of the Value Added Tax Law and Special Consumption Tax law, the Law on Personal Income Tax, the Law on Natural Resources Tax, and the Law on Import and Export Taxes to ensure compliance with actual operations and increase fair competition in domestic manufacturing industries.

On this issue, the State Bank also directed and instructed commercial banks and credit institutions to restructure debts and reduce lending interest rates for projects, enterprises, and at the same time consider continue lending in accordance with the laws and market principles to ensure capital for production and business on the basis of feasible business plans of projects and businesses.

Accordingly, three fertiliser production projects under Vietnam National Chemical Group (including Ninh Binh Nitrogenous Plant Project, Ha Bac Nitrogenous Fertiliser Plant renovation project, Production Plant Project) DAP No. 2 fertiliser - Lao Cai) and Dinh Vu polyester fibre factory project have all been restructured by commercial banks, reducing interest rates to cut spending to reduce financial costs in difficult times, and continue maintain working capital limit to ensure sufficient capital for production and business activities.

Should not rely on the State

Hung said in dealing with 12 loss-making and ineffective projects in the Industry and Trade sector, the Steering Committee has determined the first implementation should be focused on resolving problems and disputes in EPC contracts, serving as a basis for finalisation of projects.

Accordingly, corporations will focus on reviewing, updating and carefully reviewing issues that are still in troubles and disputes in EPC contracts, finalising and reprocessing project assets; making plan and building schedule for handling; hiring law consulting and consulting agencies of the Ministry of Justice and concerned ministries and branches to handle.

In case the two parties do not agree to solve the problems, it is necessary to intervene via a third party arbitration agency. At the same time, the inspection, audit and investigation agencies continue to coordinate to detect, conclude and handle violations; clearly define the responsibilities of violating organisations and individuals, especially the responsibility for the loss of property and damage caused by violations.

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For projects and businesses under operation, they should continue to focus on implementing measures to renovate governance, reduce production and business costs, build market plans to improve the performance of businesses in a sustainable way.

"Enterprises must consider this as an urgent task, promoting the spirit of autonomy and self-responsibility of the unit, eliminating the expectation of relying on State support," Hung said.

By Duc Phong/ Kieu Oanh