The fate of the long-delayed Thai Nguyen Iron and Steel Plant remains uncertain due to the unfinished negotiations of the new EPC package between Thai Nguyen Iron and Steel JSC (Tisco) and the Chinese constractor MCC.
|The fate of Thai Nguyen Iron and Steel remains uncertain due to depute between Tisco and MCC
According to a recent report of the Board of Directors of Tisco, during 2017 and the first quarter of this year, Tisco has yet to resolve its depute with MCC over the EPC contract at Thai Nguyen Iron and Steel.
According to the report, in August 2017, the Chinese contractor MCC offered a $136.89 million engineering, procurement, construction (EPC) contract to complete the construction of the unfinished segments of the project. The new price was $31.49 million higher than its previous offer of $105.4 million.
However, the representative of the Board of Directors recently stated that Tisco has yet to receive opinion from the local authorities, leaving it unable to negotiate with the Chinese partner.
In another move, earlier in March, Tisco was considering taking MCC to court to deal once and for all with the overlong dispute over the EPC contract.
This was one of the three options Vietnam Steel Corporation (VNSteel) asked Tisco to consider to definitively deal with the dispute, according to dantri.com.vn.
|The Chinese contractor MCC offered a $136.89 million engineering, procurement, construction (EPC) contract instead of the previous offer of $105.4 million.
The remaining two options were maintaining co-operation with MCC and liquidating the contract with the contractor.
However, the parties have yet to select a final plan.
The plant’s construction was kicked off in 2007 under an EPC contract with the initial investment capital of VND3.8 trillion ($170.4 million). The facility has a designed capacity of 500,000 metric tonnes of iron and steel products per year.
In 2009, the project’s expected cost increased to VND8 trillion ($361.4 million).
In 2012, MCC decided to stop implementing the project and returned to China, claiming the capital increase was too high and the investor had difficulties in collecting it after disbursing more than VND4.5 trillion ($216.35 million). Thus, the project’s construction was for four years.
In March 2016, Tisco announced that it could arrange the finances necessary to continue implementing the construction. However, the two parties could not reach a compromise to continue the construction.
At the time, the prime minister requested the Ministry of Industry and Trade (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, the Chinese contractor decided to return to the negotiation table and agreed to complete the construction of the unfinished stages of the project. At present, a number of articles in the EPC contract have yet to reach a compromise.