VietNamNet Bridge – With the heavy debts of up to trillions of dong, a lot of cement companies cannot pay foreign debts. As a result, the Ministry of Finance has to come forward and pays for the loans guaranteed by the government.

30-40 million dollars a year reserved to pay businesses’ debts

A recent report by the Ministry of Finance (MOF) to the government showed that the total foreign loans of cement enterprises guaranteed by the government had reached 1.365 billion dollars by the end of 2011. The sum of money had been borrowed from foreign sources to develop 16 cement projects.

Four of the 16 projects which have the current outstanding loans of 228.75 million dollars have been found as unable to pay debts and the finance ministry has to pay for the investors.

Of the two projects which have been financially restructured – Hoang Mai and Tam Diep, only Hoang Mai can pay debts regularly, while Tam Diep is still in big difficulties.

MOF has advanced money to help the investors of two other cement projects, Thai Nguyen and Dong Banh of Coma Corporation, pay debts on schedule. However, the enterprises still cannot escape from difficulties to be able to pay debts.

Since big shareholders still have not contributed enough money as promised, and the cement plant has incurred the big loss of 197 billion dong, the Dong Banh Cement Plan fell into insolvency, which forced it to stop operation since March 2012.

According to MOF, 3.49 million dollars has been lent to Dong Banh to pay the debts, and if Dong Banh cannot improve its situation, its total debts, both principal and interests, would climb to 600 billion dong in the next five years.

The same situation is being faced by Thai Nguyen Cement Plant, capitalized at 3536 billion dong, a subsidiary of Vinaicon. The project still has not got any sources of income to pay debts, while the holding company cannot pay the principals and interests in 2011, which has forced MOF to pay 4.25 million euros for the plant.

The report said that after one year of operation, the cement plant had incurred the loss of 77 billion dong. It’s still unclear when the plant can pay 120 million dollars worth of principal back to MOF paid the creditor for plant.

Another cement project in the danger is the Tam Diep cement plant invested by the Ninh Binh Cement Company. MOF had to pay 10 million dollars for the project in 2010, and then another sum of 74.55 million dollars in July 2011.

The list of the cement projects which incur heavy losses includes the Ha Long Cement Plant belonging to the Song Da Corporation. It has reportedly incurred the loss of 1215 billion dong and had borrowed 2 trillion dong by the end of the first quarter of 2012 to pay debts.

MOF has predicted that it would have to arrange some 30-40 million dollars a year to pay debts for cement investors.

Capital withdrawal from investment projects would help?

The Ministry of Construction has asked for the government’s permission to transfer more than 17.114 million shares being held by Coma in Dong Banh Cement Company to Hoang Phat Vissai Corporation. If the deal is approved, Hoang Phat Vissai would take over the responsibility of paying the debt worth 3.4 million dollars to the MOF.

Experts believe that if the proposal gets the nod from the government, Dong Banh would be rescued. This seems to be the only way out to the investor who has failed with the project.

Meanwhile, Vinaconex plans to sell 75 percent of its stakes in Cam Pha Cement Plant to the Vietnam Cement Industry Corporation VICEM, after Cam Pha reported the big loss of 1259 billion dong.

1 USD = 21,000 VND.

Tien Phong