Many loss-making projects get deeper in the red

Of the 12 loss-making projects under the jurisdiction of the Ministry of Industry and Trade, only two have reported profits and most other projects had their debts restructured after incurring more bad debts, according to a report submitted by the ministry to the National Assembly.

Among the six operational plants, two plants are making profits, with DAP No. 1-Haiphong fertilizer plant recording a profit of VND147.7 billion in the January-August period and Viet Trung steel plant earning a profit of VND527.24 billion.

The four remaining plants have seen losses being reduced compared with the same period last year. In particular, Ha Bac fertilizer plant has incurred losses of VND203 billion; DAP No. 2-Lao Cai fertilizer plant, VND110.78 billion; Ninh Binh fertilizer plant, VND701.85 billion; and the Dung Quat shipbuilding project, VND61.61 billion.

However, among the three projects with suspended operations, the Dinh Vu polyester plant has resumed three production lines. Meanwhile, the Quang Ngai and Binh Phuoc ethanol projects are ready for operation once market conditions become favorable.

As for the three projects under construction, while the Phuong Nam pulp mill is working to put its assets and inventories up for auction, the Phu Tho ethanol plant is facing difficulties as PVOil as its main shareholder (holding a 39.76% stake) and external shareholders (holding 60.24%) do not inject more capital, preventing the project from proceeding.

Besides this, the Thai Nguyen iron and steel plant has yet to settle engineering, procurement and construction contract disputes with the Chinese main contractor and subcontractors.

As required by central authorities, the handling of these State-invested projects shall follow market principles, and they would not receive any more capital from the State.

Most projects and businesses of this kind have had their payment times, periodic payments and interest rates adjusted.

Banks’ risk provisions, set aside for credit supplies to these businesses as of June 30, amounted to VND5.536 trillion, up VND427 billion against January 31, as many loans turned bad debts.

Seventeen commercial banks and one financial company had supplied credit to the 12 projects, at a combined VND20.943 trillion as of the middle of the year, a VND96 billion increase from last January. Of this total, medium-term loans made up VND17.211 trillion (82%) and short-term loans, VND3.732 trillion (18%).

Vietnam Development Bank (VDB) alone has funded seven of the 12 projects. The bank has so far recovered 30.9% of the principal debt in dong and 34.9% of debt in U.S. dollars and accumulated interest.

Principal outstanding loans at VDB for these enterprises were recorded at VND10.118,846 trillion and US$1.69 million.

The DAP No. 1 fertilizer plant is the only one to have paid off both principal and interest sums to VDB.

As the State will not provide further capital for these projects, given their main shareholders are State groups and corporations, investors are having difficulty in mobilizing capital, particularly for the fertilizer production projects of Vietnam National Chemical Group.


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