Vinachem loses big-time in fertiliser plant

August 15, 2016 | 18:00

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Vietnam National Chemical Group is shouldering great debts after developing Ninh Binh nitrogenous fertiliser plant, which has been amassing continuous losses in its operations, according to newswire Antt.vn.

According to Vinachem’s financial report, as of December 31, 2014, the company’s debts included VND6.74 trillion and VND1.2 trillion in long and short-term dues, respectively. Additionally, it has to pay an annual interest of nearly VND1 trillion ($44.8 million), equalling VND2.6 billion ($116,503) per day.

To collect capital for developing Ninh Binh nitrogenous fertiliser plant, in September 2008, Vinachem took up a loan of $250 million form Chinese Eximbank, with an annual interest rate of 4 per cent for 15 years.

As of December 31, 2014, China’s Eximbank disbursed VND4.27 trillion ($225 million) of the loan. Vinachem had to pay VND534.4 billion ($23.9 million) in 2015 in interest only.

Taking up this sizeable loan from China was considered the primary reason for choosing China Huanqiu Contracting & Engineering Company as the project contractor.

In early 2014, Vinachem and Bank for Investment and Development of Vietnam (BIDV) signed a credit contract for a short-term loan of VND1.2 trillion ($53.8 million) and a mid-term loan of $6.4 million.

In late 2013, Vinachem took up VND862.8 billion ($38.6 million) from Hanoi-based Vietinbank to pay off its debts to Vietnam Development Bank (VDB)’s branch in Ninh Binh province. Accordingly, in the 2008-2009 period, Vinachem borrowed VND3.4 trillion ($152.3 million) from the branch to develop the nitrogenous fertiliser plant. As of December 31, 2014, Vinachem’s debts towards this bank stood at VND2.47 trillion ($110.7 million).

The plant’s construction was kicked off in May 2008 in Ninh Binh’s Khanh Phu industrial zone and it came into operation 42 months later, in 2012.

However, the plant was forced to call a temporary halt to its operations in late March due to its continuous losses, accumulating over VND2 trillion ($89.9 million) in losses. Notably, in 2012, the company’s losses amounted to VND75 billion ($3.37 million), VND759 billion ($34.12 million) in 2013, VND500 billion ($22.48 million) in 2014, and VND370 billion ($16.63 million) in 2015.