Trillions of dongs of Vietinbank stuck in Vinachem projects

April 04, 2019 | 13:34
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Four of the trillion-dong loss-making projects under the Ministry of Industry and Trade (MoIT) are under the hands of Vietnam's chemical group Vinachem, which managed to turn a profit at only one of them last year, while the others retain hefty bank loans with no sign of repayment.
trillions of dongs of vietinbank stuck in vinachem projects
VietinBank has trillions of dongs frozen in Vinachem projects

Vinachem's latest report provided information about the four projects under Vinachem's management that are part of the 12 notorious loss-making projects of the MoIT. Accordingly, only a single one of the four projects under the company has managed to turn a profit last year. The three others are still making losses.

Specifically, DAP-Vinachem JSC in Haiphong gained VND196 billion ($8.5 million) of profit in 2018, up VND182 billion ($7.9 million) on-year. Of the remaining three projects, DAP2-Vinachem JSC (Lao Cai) lost VND246 billion ($10.7 million), Ha Bac Nitrogen Fertiliser Plant VND340 billion ($14.8 million), and Ninh Binh Nitrogenous Fertiliser Plant VND926 billion ($40.26 million).

Of these, Ninh Binh Nitrogenous Fertiliser Plant is facing the greatest difficulties, which Vinachem chairman Nguyen Phu Cuong said the plant has been reopened but has been performing poorly. "This plant cannot produce because it cannot borrow from any bank. It is maintained from the advance payments provided by customers," said Cuong. "If the project dies, Vinachem will lose its VND6 trillion ($260.9 million) it contributed to the VND13 trillion ($565.2 million) charter capital."

Meanwhile, Ha Bac Nitrogen Fertiliser Plant, which is listed on the Hanoi Stock Exchange (HNX), has accumulated losses of VND2.65 trillion ($115.2 million), according to its 2018 financial statement, almost equivalent to the company's charter capital of VND2.722 trillion ($118.35 million), and short-term liabilities have exceeded total short-term assets by VND2.022 trillion ($87.9 million). Thereby, it seems uncertain that the plant can remain in operation.

For DAP2-Vinachem JSC, Vinachem had to make a provision of VND802.5 billion ($34.9 million), equivalent to 53.05 per cent of the subsidiary's charter capital.

Numerous banks involved

As of the end of 2018, the two biggest lenders of Ha Bac Nitrogen Fertiliser Plant were Vietnam Development Bank (VDB) with the loan of around VND3.995 trillion ($173.7 million), and VietinBank's Bac Giang branch with VND3.678 trillion ($160 million).

They are the two biggest lenders of DAP2-Vinachem JSC (Lao Cai) too. VDB's Lao Cai branch and VietinBank's Hanoi branch provided credit loan of VND1.735 trillion ($75.4 million) and VND1.1 trillion ($47.8 million), respectively. Additionally, VietinBank's VND462.7 billion ($20.1 million) has been stuck in Ninh Binh Nitrogenous Fertiliser Plant.

In case these companies are unprofitable and cannot pay their loans, the lenders will have to record them as bad debts, which will significantly impact their business operations.

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