After nearly four years since the plant came into operation in 2012, it has been running continuous deficit, accumulating altogether VND2.7 trillion ($121.49 million) in losses. Besides, Vinachem is shouldering great debts worth nearly VND8 trillion ($359.98 million).

There are numerous reasons for the plant’s losses. Notably, in the last two years, urea fertiliser prices in the market have seen a continuous decrease, while manufacturing expenditures, including depreciation fee, high interest rate as well as the exchange rate difference, still stand at a high level.

Besides, Ninh Binh nitrogenous fertiliser plant is fuelled by coal, while other such plants run on gas. While gas fuel prices are on a continuous decrease, coal prices are immobile, leaving the Ninh Binh plant at a loss against competition.

Furthermore, farmers in the north usually use phosphate fertilisers, thus Ninh Binh nitrogenous fertiliser plant has continuous difficulties selling its products.

In order to help the plant recover, the Ninh Binh People’s Committee submitted proposals to the PM for approval. Notably, the province requested to extend the deadline to repay its debts to Chinese Eximbank by at least five years. The debt was incurred in September 2018, when Vinachem took up a loan of $250 million with an annual interest rate of 4 per cent for 15 years.

As of December 31, 2014, Eximbank disbursed VND4.27 trillion ($225 million) of this loan. Vinachem had to pay VND534.4 billion ($23.9 million) in 2015 in interest only.

The province requested the PM to allow the plant to apply the provisioning policy in case of having changes in the exchange rate different on loans from overseas.

In addition, the province proposed allowing Ninh Binh Fertiliser to apply safeguard measures on urea products, aiming to decrease the volume of low-price import products, which is a major factor of the plant’s losses.

Earlier in June, Vinachem submitted 11 separate plans to deal with the plant’s difficulties to the government and the Ministry of Industry and Trade, one of which was actually closing the plant.

The plant’s construction was kicked off in May 2008 in Ninh Binh’s Khanh Phu Industrial Zone and came into operation within 42 months, in 2012. 

During the nearly four years since then, the plant has been operating at a continuous deficit with a loose of VND2.7 trillion (($121.49 million). 

Besides, according to Vinachem’s financial report, as of December 31, 2014, the company is suffering a massive debt, including VND6.74 trillion ($303.3 million) and VND1.2 trillion ($53.99 million) in long and short-term dues, respectively. Additionally, it has to pay an annual interest of nearly VND1 trillion ($44.8 million), equalling VND2.6 billion ($116,503) per day.

VIR