The Government Inspectorate has detected several violations in the building and operation of Dinh Vu Polyester Manufacturing Plant in the coastal city of Hai Phong, which led to huge economic losses.

The plant, developed by PetroVietnam Petrochemical and Textile Fiber Company (PVTex), was a joint project between state-run PetroVietnam (PVN) and Việt Nam Textile and Garment Group (Vinatex). It aimed to help the country’s textile sector reduce its reliance on imported raw materials.

However, late last year, the US$359 million plant had to shut down after more than three years of operation. According to the inspection, the plant incurred losses of more than VNĐ1.4 trillion ($62.7 million), including VNĐ21 billion in 2012, VNĐ366 billion in 2013, and VNĐ1 trillion in 2014.  

The investment capital of the plant increased from the initial estimate of $325 million to $359 million, with the payback period of the project also increasing to 22 years and 10 months.

Inspectors found that there were signs of “deliberate contravention of State regulations” and “irresponsibility” in approving the project, selecting contractors, as well as purchasing equipment which resulted in losses and waste of investment capital.

The inspectors said PVTex, as the investor, and the contractors did not comply with  regulations in purchasing equipment stipulated in contracts, and changed the source of some equipment without prior negotiations. 

For example, some equipment which was supposed to be made in Germany was switched with equipment made in China. Some equipment suffered problems or broke down soon after being used which prolonged the pilot period of the plant’s operation.

PVTex was also blamed for inappropriate spending and inaccurate assessment and calculation of the project’s cost that led to the surge in the final total investment.  During the project, PVTex, contractors and supervising bodies accepted wrong or duplicated payments worth billions of đồng, the inspectors said.

The inspectors also pointed out that then Prime Minister Nguyen Tan Dung requested PVN to cut its stake in PVTex from 56 per cent to 36 per cent in 2013. However, decisions by MoIT and PVN have actually increased the corporation’s stake in PVTax to 75 per cent, violating the PM’s directive.

The inspectors said PVN, Vinatex, and the Ministry of Industrial and Trade (MoIT) were irresponsible in instructing, monitoring and inspecting the implementation of the project.

They proposed that Prime Minister Nguyen Xuan Phuc instruct related ministries and agencies to seek ways to reclaim VNĐ54 billion ($2.4 million) and more than $22,000 of losses due to inaccurate and duplicated payments. 

They asked for administrative punishments for officials and organisations at PVN, Vinatex and MoIT.

They also proposed passing the documents of the case to the Ministry of Public Security for further investigation. 

VNS