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Projects of powerful conglomerates incur losses
“The government won’t continue pouring money into huge unprofitable projects like Thai Nguyen iron & steel project (Tisco),” Prime Minister Nguyen Xuan Phuc said at a MOIT conference held several days ago.
The project is now called ‘Vinashin in the steel industry’ (Vinashin is a shipbuilder which also gobbles up big money and incurs heavy losses). Despite a lot of investment incentives, it is now ‘at the point of death’ after seven years of operation.
The project on expanding the Thai Nguyen steel mill, to churn out 0.5 million tons a year, kicked off in 2007 with the initial capital of VND3.843 trillion. In 2012, MCC, the Chinese contractor left Vietnam and did not hand over important items to the investor. To date, 10 years after the EPC contract was signed, the mill still has not taken shape.
A series of multi-trillion dong investment projects developed by large conglomerates belonging to the Ministry of Industry and Trade (MOIT) have incurred heavy losses.
In fact, Thai Nguyen is just one of many unprofitable projects invested by MOIT’s enterprises. The Ninh Binh Fertilizer is also a project which has recorded a big loss: just after four years of operation, the VND12 trillion took a loss of VND2 trillion.
The investor hoped that after the construction was completed in mid-2011, the plant would churn out 1,760 tons of urea a day. However, the first ton was produced only in March 2012.
A report of Vinachem, the largest investor, showed that Ninh Binh has been taking losses since 2012 and incurred a loss of VND370 billion in 2015.
Some years ago, PetroVietnam, the national oil & gas group, saying that biofuel will be the fuel of the future, decided to build three ethanol plants in the northern, central and southern regions, capitalized at trillions of dong.
However, the construction of the VND2.5 trillion Tam Nong ethanol plant stopped in late 2011. The Binh Phuoc VND1.7 trillion plant has halted its operation because its products cannot be sold. Meanwhile, the 100 million liter a year Dung Quat Bio-methanol plant, capitalized at VND2.2 trillion, has been operating at a moderate level since April 2015.
Besides the biofuel plants, PetroVietnam invested $325 million in PVTex, a polyester plant.
The investor planned to use materials from the Dung Quat Oil Refinery to make polyester, aiming to help Vietnamese textile & garment companies, which now have to import materials, to take the initiative in material supply.
However, since the products cannot be sold, PVTex had to stop operation in September 2015.
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