'Project approval is very fast but implementation is very slow'

“All 12 loss-making and inefficient projects and factories of the Industry and Trade sector have two common problems, the most common of which is that project establishment and approval are done very quickly, but when it comes to implementation, basic construction investment management is very sluggish.”

That was the affirmation of Deputy Prime Minister Vuong Dinh Hue - Head of the Government's Steering Committee to handle the existing weaknesses of a number of weak factories and projects in the Industry and Trade sector, at a meeting to implement the recent Politburo's conclusion on these units, on July 5.

The Government leader emphasized that the value of these projects, equivalent to 3 billion USD, is now "buried", unable to contribute to the economy, so it needs to be cleared as soon as possible.

Notably, at the meeting, Deputy Prime Minister Vuong Dinh Hue expressed dissatisfaction with the stagnation and indifference of the leaders of the Vietnam Oil and Gas Group (Petro Vietnam) in overcoming the consequences of projects under its investment and management.

63 trillion "shelved", accumulated loss 16 trillion

According to the Steering Committee's report, 12 projects and factories of the Industry and Trade sector have a total investment of 63,610 billion VND. Of which, equity is 14,350 billion. The remaining 47,000 billion VND (accounting for 75% of the total investment) is borrowed, of which bank loans are 41,800 billion VND, foreign loans with guarantees are 6,600 billion VND.

Assessing the current status of factories and projects, Deputy Minister of Industry and Trade Hoang Quoc Vuong said that there are 6 factories operating but making losses, including 4 fertilizer factories, Dung Quat Shipyard and Viet-Trung Steel Company. Three projects and factories that have stopped construction are Phu Tho Ethanol Factory Project, Phuong Nam Pulp Factory and Thai Nguyen Iron and Steel Factory Phase 2. Three factories that have stopped operating are Binh Phuoc Biofuel, Dung Quat Biofuel and Dinh Vu Fiber.

Of these, 10 factories are operating or have stopped production with accumulated losses of VND 16,126 billion (as of December 31, 2016) and equity of only VND 3,956 billion, in which many factories have negative equity.

Speaking about the current situation of the 12 projects, Deputy Prime Minister Vuong Dinh Hue pointed out: The first common problem of the 12 projects and factories is that when the project is established and approved, it is done very quickly, but when it comes to organizing implementation and managing basic construction investment, it is very slow, there are legal problems with EPC contractors, the total investment adjustment increased by 43% compared to the estimate, many projects have been prolonged until now and have not been completed, some factories have been completed but cannot operate.

The second disease is when making an investment and production business plan, the input parameters are positive, production costs are low and output value is high, but when operating, the input parameters are high but the output value is low.

However, after drastic measures to remove difficulties for projects and factories, the situation has changed positively. Four nitrogen fertilizer factories including Ninh Binh nitrogen fertilizer, Ha Bac nitrogen fertilizer, Dinh Vu DAP, Lao Cai DAP are operating well at 80% capacity. Dinh Vu and Lao Cai DAP factories have diversified their products with 64% high-value green nitrogen, earning a profit of 600,000 VND/ton.

The Deputy Prime Minister also assessed that the Vietnam-China Steel Factory had renegotiated with the Chinese side, turning the situation in favor of the Steel Corporation, changing the management model to 2 members and the production and business situation in the past 6 months had a profit of 67 billion VND.

"If Vietnam-China steel continues to do well, next year it will be removed from the list of weak projects like the fertilizer projects," said the Deputy Prime Minister.

Petro Vietnam's projects are "getting worse and worse"

However, the Deputy Prime Minister was not satisfied with the second group of projects that "had almost no progress and the situation was getting worse", including Dung Quat shipyard, Dinh Vu Fiber Plant and biofuel projects and factories of the Vietnam Oil and Gas Group (Petro Vietnam).

Specifically, the Dung Quat Ethanol Plant has not been able to resume operations because it does not guarantee both economic and technical factors. Dinh Vu Fiber Plant is getting worse and worse because of litigation. Dung Quat Shipyard has not yet finalized the EPC contract for the construction of the first phase of the plant and has not yet agreed on the value/cost of the investor of the 104,000 DWT ship project for Petro Vietnam to use as a basis for signing a debt acceptance contract, mortgaging assets as security and repaying debt to the Vietnam Development Bank.

Emphasizing the direction of handling projects and factories in the coming time, the Deputy Prime Minister requested to closely follow the conclusions of the Politburo to achieve two goals: Quickly and completely resolve existing problems, minimize damage to the State according to the roadmap of completing the plan by the end of 2017, submitting it to the competent authority for approval and completing the implementation of the plans (including selling the Phuong Nam Pulp Factory); fundamentally handling weaknesses by the end of 2018 and completing the handling of these factories and projects by 2020.

At the same time, strictly handle economic management violations of individuals and groups causing losses at the above projects and factories.

The Deputy Prime Minister affirmed that “we will resolutely handle the situation according to the market mechanism with two points: respecting the principles of autonomy and self-responsibility of enterprises and the State will resolutely not provide additional capital to projects and factories. Resolutely resolve legal problems of projects early. Prioritize the sale of projects and factories to non-state investors, allow the dissolution of unviable projects, and recover maximum assets...”.

"Whoever can't do it must be replaced"

The Government leader emphasized that the value of these projects, equivalent to 3 billion USD, is now "buried", unable to contribute to the economy, so it needs to be cleared as soon as possible.

“There is still a way forward for the projects if we get started following the direction of the Politburo and the Government,” the Deputy Prime Minister said, asking ministries, especially relevant corporations and groups to get to work. “Those who do not do it or cannot complete it must be replaced,” the Deputy Prime Minister stated.

Regarding the responsibility of the Vietnam Oil and Gas Group in handling these projects, the Deputy Prime Minister pointed out that the Group's leaders said they would restart the Dung Quat Ethanol biofuel plant, but it has not yet restarted. Regarding the dispute over the EPC contract when building the Dung Quat shipyard and handing over the 104,000 DWT ship, the Deputy Prime Minister asked why the contractor and the investor, all under the Vietnam Oil and Gas Group and state-owned enterprises, could not resolve the issue with each other?

“Because you comrades refuse to do it. Stop talking in generalities because the more you talk, the less you can do it. The whole National Assembly, the Government and the entire population are upset, but the Group's leaders act as if it's not their job,” Deputy Prime Minister Vuong Dinh Hue said harshly.

The Deputy Prime Minister said that to implement the Politburo's conclusion and promote the progress of handling, the Prime Minister will soon issue a Decision on promulgating the action plan of the Steering Committee in the coming time.

According to Nguyen Ha/vneconomy