The report said that the task of handling of these loss-making projects was around two thirds finished in the 2017-2019 period but the remaining task was the most difficult, as problems were in settling disputes and finalising engineering, procurement and construction (EPC) contracts, debt restructuring and developing capital divestment plans.
There were some improvements since the handling effort was started in 2017 under Project 1468.
Two projects escaped losses and reported profits. DAP No 1 Hai Phong fertiliser plant project reported an after-tax profit of VND227.5 billion in 2018 and an estimated VND6.2 billion in 2019. The Viet-Trung steel plant earned an after-tax profit of VND397 billion in 2018 and VND177.4 billion in 2019.
The report said that these two projects saw lower profits in 2019 than 2018 because the market was more difficult.
Four projects saw their losses drop in 2018, including Ha Bac nitrogenous fertiliser plant (down by VND342 billion), DAP No 2 Lao Cai fertiliser plant (down by VND208.8 billion) and Ninh Binh fertiliser plant (down by VND417.2 billion).
The loss of Ninh Binh fertiliser plant continued to drop by VND134 billion in 2019. However, Ha Bac and DAP No 2 fertiliser plants saw bigger losses by VND239 billion and VND178.2 billion in 2019, respectively.
Dung Quat Shipyard Company’s losses also fell by VND64 billion in 2019. One project resumed operation, namely Dinh Vu Polyester Fiber Plant.
The report said that seven out of 12 projects remained loss-making, unfinished or halting operation.
Notably, five had disputes with partners of EPC contracts and settling disputes remained a big problem because a number of negotiations failed.
Those were DAP No 2 Lao Cai fertiliser plan, expansion project of Ha Bac nitrogenous fertiliser plan, Ninh Binh fertiliser plan, Dung Quat shipbuilding plant project and second-phase expansion project of Thai Nguyen Iron and Steel Company.
Another big concern was the huge volume of outstanding loans of these projects, most were overdue.
Statistics showed that these projects owned debts worth VND20.938 trillion as of December 31, 2019 to 17 commercial banks and one financial company, VND17.169 trillion were medium and long term loans while VND3.769 trillion were short term.
Besides, Vietnam Development Bank also provided outstanding loans worth VND9.796 trillion to six out of 12 projects.
Banks also provided loans worth VND22.964 trillion to relevant contractors of these projects.
The report also said that a number of inspections were carried out to find out violations at these projects. Four were now under the investigation of the Ministry of Public Security.
The Government’s report also said that projects which could not be recovered would be allowed to go bankrupt or dissolved to maximise the recovery of the State capital and assets, ensure rights of workers and stabilise the business climate.