A worker at Việt Nam-China Steel Mill. — VNA Photo
The US$325-million Đình Vũ Polyester Plant resumed production in March last year, but had reported a loss of more than VNĐ5 trillion by the end of August this year, making it the heaviest loser of all MoIT projects.
Elsewhere, bio-energy plants in Bình Phước and Quảng Ngãi showed losses of nearly VNĐ1.4 trillion and VNĐ1 trillion, and Phương Nam Pulp Mill’s total liability had reached more than VNĐ3 trillion by September this year.
DAP Fertiliser Hải Phòng and Việt Nam-China Steel Mill were the only two profitable companies on the list. DAP Fertiliser Factory Hải Phòng reported a modest VNĐ7.2 billion profit after tax and Việt Nam-China Steel Mill posted VNĐ270 billion, but both looked unlikely to maintain their momentum next year.
A few other projects have been able to reduce their losses. Fertiliser firms Ninh Bình and DAP Fertiliser Lào Cai were able to cut their losses by VNĐ417 billion and VNĐ208 billion, respectively.
The report highlighted a number of issues that must be resolved including settlement of legal disputes over EPC contracts (Engineering, Procurement and Construction), finalisation of projects and recovery of State capital.
Seven out of the 12 projects were dealing with legal battles over EPC contracts. As attempts to settle disputes had failed, some cases now must go before international courts.
As the State will no longer pump money into those projects, companies said they were without the required financial resources to dig themselves out. Lack of funding has already hurt their operation and profitability due to increased input costs.
Recovering State capital remained a challenging task. Investors from the private sector either showed little or no interest in loss-incurring projects or were unable to buy in due to ongoing legal disputes.
The report recommended companies to conduct a comprehensive review of their operations to reduce costs and cut losses. A study of their products and markets must also be carried out in order to increase sales. The Government must make greater efforts to encourage private investors to buy in as additional investment are crucial to bringing these projects out of the red. — VNS
