Ninh Binh nitronegous fertiliser plant resumes operations in massive debt

Ninh Binh Nitronegous Fertiliser is looking for short-term solutions for its deep-rooted ails

According to information from Vu Van Nhan, general director of Ninh Binh Nitrogenous Fertiliser One-Member Co., Ltd., after surmounting technical problems, the plant has resumed operations on January 22, 2018 at 80 per cent of its designed capacity. Within one week (January 22-29), the plant manufactured 27,000 tonnes of urea fertiliser, 22,000 tonnes of which was bought.

Nhan stated that at present, the plant is in stable operation, however, it is difficult for Ninh Binh nitrogenous fertiliser company to maintain operations on the long run because the firm lacks floating capital and suffers from massive debts. Notably, in 2017, the firm reported VND1.172 trillion ($51.5 million) in revenue, however, it still suffered a massive loss of VND933.5 billion ($41.03 million).

Furthermore, as of August 2017, the company shouldered debts of VND4.502 trillion ($198.69 million) from various banks. VND3.263 trillion ($143.4 million) of this is long-term loans from VietinBank, VND1.184 ($52.04 million) from BIDV and Vietcombank, and VND55 billion in interest payments to BIDV and VietinBank.

Besides, the company had to borrow from Vietnam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin) VND133 billion ($5.85 million) worth of materials to maintain its operations until the end of this March. In the next short-term period, the company needs an additional VND80 billion ($3.5 million) to buy 40,000 tonnes of coal for production.

At the working session with Deputy Minister of Industry and Trade Do Thang Hai, the company’s Board of Directors requested support from the government, the Ministry of Industry and Trade, as well as banks.

Notably, the Board of Directors proposed MoT to guarantee a loan of VND350 billion ($15.38 million) of floating capital from banks for the company’s manufacturing and trading activities. Besides, the company proposed a three-year loan of VND200 billion ($8.79 million) to overhaul the plant this year.

Hai stated that MoIT will co-operate with Vinacomin to support Ninh Binh Nitrogenous Fertiliser plant to deal with its financial and technological problems. The ministry will organise a working session with Vietnam National Chemical Group (Vinachem)—the investor of the plant—and Vinacomin to discuss Vinacomin providing 40,000 tonnes of coal in advance to ensure the plant remains in operation.

However, in reality, the company will have to make some radical changes to remain on the surface at an oversupplied urea fertiliser market. Besides, with the plant’s bleak business results, banks will not be forthcoming with further loans.