Debts at Thai Nguyen Iron and Steel plant – phase 2 await extension

Thai Nguyen Iron and Steel plant – phase 2 has requested an extension to its debts to stay afloat

There are only nine months left until the deadline to deal with loss-making projects managed by the Ministry of Industry and Trade, including Thai Nguyen Iron and Steel plant – phase 2, however, Thai Nguyen Iron and Steel JSC (Tisco) (the investor of the project) remains impotent to make significant changes and is waiting for help from authorities.

13 years since the construction was kicked off, the Thai Nguyen plant stays unfinished due to the difficulties in negotiating with the Chinese contractor China Metallurgical Group Corporation (MCC).

According to the latest report from the company, by the end of 2019, the investor poured VND5.36 trillion ($233 million) in Thai Nguyen Iron and Steel plant – phase 2.

At the end of last year, Tisco's original debt of VND615 billion ($26.74 million) was past the repayment deadline. Its short-term debts were VND2.88 trillion ($125.22 million), higher than its short-term assets.

The loans taken up to implement Thai Nguyen Iron and Steel stood at VND3.56 trillion ($154.78 million) as of the end of last year.

Tisco's maintaining operations basically depend on securing approval to extend the payment deadline of its debts as well as mobilising capital to for trading activities.

At a meeting to discuss plans to deal with loss-making or delayed projects under the management of the MoIT in early April, Nghiem Xuan Da, chairman of the Board of Directors of VNSteel Corporation (the parent company of Tisco) said that the negotiations between the investor and the Chinese contractors have yet to be finished. MCC issued the compulsory condition that the investor will have to add $100 million to complete the unfished parts.

In 2014, SCIC contributed VND1 trillion ($43.48 million) to Tisco's charter capital but revoked this capital after three years.

At the time, the prime minister requested the MoIT to establish a working group to build plans to sell the project or Tisco’s stake.

In September 2017, after numerous failed negotiation attempts and long years of silence, the Chinese contractor decided to return to the negotiation table and agreed to complete the construction of the unfinished stages of the project. However, at present, the sides have not reached a compromise in a number of articles in the EPC contract.