Fate of numerous loss-making projects remains uncertain

Most of the 12 notorious loss-making projects are still in limbo

According to the latest information published by the Ministry of Finance, to date, two of the 12 loss-making projects, namely DAP 1 Haiphong fertiliser plant and the complex of Quy Xa iron ore mining and quarrying project and Lao Cai iron and steel plant, now operate at a profit.

Besides, five other projects are making efforts to be removed from the list. These include Ha Bac, Ninh Binh, and DAP 2 Lao Cai fertiliser plants, Dung Quat Shipbuilding Industry Co., Ltd., and Dinh Vu polyester fibre factory.

Meanwhile, the Binh Phuoc ethanol biofuel project and Bio-Ethanol Dung Quat plant have suspended operations after defaulting on their debts.

The remaining three are projects which have yet to finish construction.

Vietnam Paper Corporation (Vinapaco) is seeking approval to apply a 10 per cent discount to increase the chances of auctioning off Phuong Nam Pulp Mill, the first of the three.

Meanwhile, the government and agencies are looking for solutions to divest from Phu Tho bio-fuel plant and Thai Nguyen iron and steel plant-phase 2, while simultaneously looking for strategic investors for these two projects.

Notably, the prime minister requested the Ministry of Industry and Trade (MoIT) to establish a working group to build plans to sell Thai Nguyen iron and steel plant-phase 2 or sell Thai Nguyen Iron and Steel JSC (Tisco)’s stake in it. At present, Tisco is negotiating with the Chinese contractor China Metallurgical Group Corporation (MCC) to deal with the overlong dispute over an EPC contract once and for all.

According to Dang Quyet Tien, director of the Corporate Finance Department under the Ministry of Finance, numerous private investors expressed interest in Ninh Binh fertiliser and Thai Nguyen Iron and Steel plant-phase 2, however, the authorities have to publish the criteria to select investors instead of assigning them.

Phung Van Hung, a standing member of the National Assembly's Economic Committee, stated that it is necessary to deal with the existing problems at the projects before a divestment or sales can be conducted.

According to the MoIT, the total initial investment in these 12 projects was some VND43.7 trillion ($1.91 billion), which was later adjusted to VND63.6 trillion ($2.79 billion) (an increase of 45.65 per cent). Of this, equity was VND14.4 trillion ($632.3 million), accounting for 22.56 per cent, while loans made up 74.6 per cent with about VND47.5 trillion ($2.08 billion). The remaining 2.84 per cent came from other sources.

As of December 31, 2017, the total debts of the 12 loss-making projects increased by VND3.44 trillion ($150.8 million) to VND58.5 trillion ($2.56 billion), almost all of which is threatening to become bad debts.