State loss-making projects can bring problems to arbitration
Deputy Prime Minister Vuong Dinh Hue agrees 12 loss-making State-funded enterprises may bring their conflicts with contractors to arbitrators if those conflicts are not resolved by the end of this year.
|The Dung Quat Bio-ethanol Plant in the central province of Quang Ngai, one of the 12 loss-making projects being supervised by the State Capital Management Committee. — Photo petrotimes.vn|
According to the State Capital Management Committee, main conflicts between those companies and contractors are related to engineering-procurement-construction (EPC) contracts. Seven of the 12 companies have not found a way to resolve the problems while the others will have to ask for the assistance of arbitrators.
The Vietnam Chemical National Group (Vinachem) and the Vietnam Steel Corporation (VNSteel) are two State-owned enterprises that will have to consult arbitrators after their problems with contractors remain unsolved. Meanwhile, the Vietnam National Oil and Gas Group (PetroVietnam) has not reached agreements with contractors to deal with problems in two of its ethanol petrol plants in Phu Tho and Quang Ngai.
“State-owned enterprises should negotiate with contractors first before taking the cases to the referee,” Hue said at a meeting on Friday.
If negotiations fail, enterprises and projects involved in the cases must report to the State Capital Management Committee and the Ministry of Justice before bringing the cases to the arbitration office, the Deputy PM said.
“Trials to settle the disputes, if any, must be dealt between company and company, not between the Government and company,” he said. “Violations in those projects must be revealed and any individuals and units failing to comply with the law must be punished accordingly.”
The State Capital Management Committee in July received 11 of the 12 loss-making projects from the Ministry of Industry and Trade. Of the 11 projects, six plants had either made profits or cut losses as of 2018 but their performances have been undermined by lack of capital and existing debts.
Vinachem chairman Nguyen Phu Cuong proposed banks continue providing lower loans and charges off existing loans so that the projects are able to keep operating.
He said that Vinachem projects have been re-operated efficiently but difficulties still exist because banks agree to lend back only 10 per cent of the collected debts, leading to a lack of funding for production.
The enterprise has been paying debts for its fertiliser plants in the provinces of Ninh Binh and Bac Giang since the beginning of the year, Cuong said, citing Vinachem has paid VND700 billion (US$30.1 million) worth of debts for its Ninh Binh plant.
According to deputy governor of the State Bank of Vietnam Dang Thai Son, loans for loss-making projects are already the lowest rate compared to others. Meanwhile, charging off existing loans would need special approval of the Government.
Deputy PM Hue asked the Ministry of Finance and the central bank to help enterprises and their projects continue paying back loans and interest. The capital management committee was asked to submit better solutions to the Government to improve the quality of corporate governance and business operation in those projects.
Hue also agreed with the committee and enterprises to transform the Viet Nam-China Steel Co Ltd to a joint-stock firm so it can raise capital to enhance business performance.
In addition, the Deputy PM agreed to remove Vinachem’s plant in the northern port city of Hai Phong from the list of 12 loss-making projects as it has made improvements recently.
Twelve loss-making projects are Dinh Vu Polyester Fibre Plant, Phuong Nam Pulp Factory, Thai Nguyen Iron and Steel Joint Stock Corporation, Dung Quat Bio-ethanol Plant, Ninh Binh Fertiliser Plant, Ha Bac Fertiliser Plant, DAP 1 Lao Cai Fertiliser Plant, DAP Fertiliser 2 Hai Phong , Ethanol Binh Phuoc, Ethanol Phu Tho, Dung Quat Shipyard and the joint venture between Quy Sa and Lao Cai Steel. — VNS
Loss-making, low-profitability State-owned agriculture firms should be dissolved and made bankrupt, said Deputy Prime Minister Vuong Dinh Hue on August 21.
As of the end of the second quarter of 2019, Vinalines reported VND8.1 trillion ($352.17 million) in total outstanding loans, including more than VND5.36 trillion ($233.04 million) in bank loans.