Positive signals in handling the shortcomings and weaknesses of 12 loss-making projects in the Industry and Trade sector

Up to now, 3 projects have been put into stable operation, making profits every year; 2 projects have reduced accumulated losses, and a number of other projects are being implemented with handling plans to ensure compliance with the direction of competent authorities and legal regulations.

Dự án Nhà máy sản xuất phân bón DAP 1 của Công ty cổ phần DAP-Vinachem từ năm 2017 đến nay sản xuất ổn định, hàng năm có lãi và đã hết lỗ lũy kế từ tháng 1/2022. (Nguồn: nhandan.vn)

The DAP 1 Fertilizer Plant Project of DAP-Vinachem Joint Stock Company has been producing stably since 2017, making profits every year and has stopped accumulating losses since January 2022. (Source: nhandan.vn)

The latest information from the State Capital Management Committee at Enterprises (Committee) shows that the progress in handling loss-making projects in the Industry and Trade sector has made new progress, opening up opportunities for the revival of some stuck projects.

Breakthrough in handling EPC contract problems

Emphasizing the progress of handling the Phase 2 Production Expansion Project of Thai Nguyen Iron and Steel Plant (Tisco 2 Project) - one of the most difficult projects to handle among the 12 projects and loss-making enterprises of the Industry and Trade sector, Chairman of the State Capital Management Committee at Enterprises Nguyen Hoang Anh said:

From October 14-24, 2022, China Metallurgical Industry Science Group Corporation Limited (MCC) sent a working delegation to work directly in Vietnam to survey, evaluate, and discuss with competent authorities and relevant enterprises of Vietnam about the Tisco 2 Project.

The working trip created a breakthrough in the process of resolving the existing problems of the Tisco 2 Project when for the first time the two sides jointly surveyed and had practical access to the machinery and equipment gathered at the site.

During the working trip to China of the Commission's delegation from March 13-19, 2023, the relevant parties conducted many negotiation sessions. This is the first time the two sides have organized a meeting, exchange, and direct contact between the top leaders of the Investor and the General Contractor after 7 years.

At the end of the negotiations, the two sides signed a working memorandum, which outlined basic handling principles; MCC's proposal on the solution direction and especially the equipment inspection and evaluation plan with specific timelines, as a basis for implementing the next steps.

This is an important step forward after 7 years of negotiations between Tisco and MCC without any documents being signed.

Based on the results of negotiations in Beijing, from March 30, 2023, the MCC expert team went to Vietnam to inspect and evaluate equipment and works at the site, as a basis for proposing a plan to restore the Tisco 2 Project.

On April 25, 2023, the MCC expert team sent Thai Nguyen Iron and Steel Joint Stock Company (Tisco) a report on the assessment results and preliminary proposals for the next handling plan for the Tisco 2 Project.

It is expected that MCC will have an official assessment report on the project handling plan by the end of May 2023. On that basis, Vietnamese enterprises will report to the Steering Committee and the Plan Committee to submit to competent authorities for consideration and decision.

For the remaining 2 projects and enterprises in the list assigned to the Committee to preside over (including the Viet Trung Steel Factory Project and the Dung Quat Shipbuilding Industry One Member Co., Ltd. Project), the Committee has had many working sessions with relevant agencies and units, actively directing enterprises to urgently have plans to thoroughly handle existing problems and difficulties according to the provisions of law and the instructions of the Prime Minister, Deputy Prime Minister Le Minh Khai - Head of the Steering Committee.

Some projects are operating profitably or at a reduced loss.

Regarding the progress of handling the remaining projects, the Committee said: For the 5 projects, the enterprises have been approved by the Politburo in principle to be assigned to PVN and the Vietnam Chemical Group (Vinachem) according to the authority and regulations of the law, to use legal capital sources to proactively handle, the production and business situation of the projects and enterprises has had many positive changes.

Some projects and enterprises have made profits, reduced accumulated losses, contributed to the State budget, reduced medium- and long-term debt of projects, ensured jobs and livelihoods for thousands of workers, and contributed to political and social stability in the locality.

Specifically, the DAP 1 Fertilizer Factory Project of DAP-Vinachem Joint Stock Company has been producing stably since 2017, making profits every year and has stopped accumulating losses since January 2022.

In 2022, the industrial production value is estimated to reach more than VND 3,319 billion (up 11.7% of the annual plan and up 12.8% over the same period). Total net revenue is estimated to reach more than VND 3,295 billion (up 8.9% and 13.8%); after-tax profit is estimated to reach VND 354,155 billion (up 83.6% and 85.5%).

Dinh Vu Polyester Fiber Production Project has positive changes in production and business activities, operating and exploiting 27 DTY yarn lines to the maximum and effectively, revenue offsets variable costs and has profit before fixed costs.

Total revenue in 2022 is estimated at about 219 billion VND (100% of the adjusted plan); profit before fixed costs is estimated at about 30.58 billion VND (84% higher than in 2021).

For Vinachem's 3 fertilizer production projects, production and business activities have been initially maintained; efforts have been made to master technology, and the average machine capacity has been gradually increased compared to the design capacity.

In particular, the project to renovate and expand the Ha Bac Fertilizer Plant still strives to maintain safe, stable and continuous machine operation, well meeting market demand and achieving high efficiency.

In 2022, realized profit will reach VND 1,779 billion (an increase of VND 1,770 billion compared to the plan approved by the General Meeting of Shareholders and an increase of VND 1,773 billion compared to the results achieved in 2021).

The Ninh Binh Fertilizer Plant Project has maintained stable and effective operations in operating machinery and equipment systems with high loads, basically taking the initiative in working capital for production and business, paying off debts to Vinachem and banks, and not having to depend on customers to advance capital to buy production materials.

In 2022, the total revenue of Ninh Binh Nitrogenous Fertilizer Plant is estimated at 6,039 billion VND (equal to 135% of the annual plan and 148% of the 2021 performance); estimated profit is 928 billion VND (an increase of 856 billion VND in profit compared to the annual plan and 985 billion VND in profit compared to the 2021 performance).

The DAP Fertilizer Factory No. 2 Project in Lao Cai has basically fulfilled its production and business targets and effectively controlled the norms compared to the plan to maintain stable production and business activities.

Production and business results in 2022 achieved a profit of 1.5 billion VND, reducing the loss by 317 billion VND compared to the 2022 plan and reducing the loss by 128 billion VND compared to the implementation in 2021.

Source