The Government will no longer inject more capital into State-funded investment projects that have racked up huge losses, according to a report Minister of Industry and Trade Tran Tuan Anh has sent to the National Assembly.

Dinh Vu polyester fiber factory, one of the 12 loss-making projects under the management of the Ministry of Industry and Trade, has been left deserted

The minister said the ministry would resolutely handle these projects in line with market mechanisms. “The Government and the ministry will take proper measures to prevent governance weaknesses at State-owned enterprises from recurring.”

From now until 2020, the ministry will identify those organizations and individuals responsible for the loss-making projects and strictly handle any violations in the investment and operation process.

At its session in late 2016, the National Assembly approved a resolution assigning the Government and the Prime Minister to review 12 debt-laden projects under the management of the Ministry of Industry and Trade and propose coping solutions.

The minister’s report showed six of the 12 projects are currently operational, including Dung Quat Shipyard (DQS), Viet Trung steel mill and four fertilizer plants.

Three projects – Phu Tho bio-fuel plant, phase two of Thai Nguyen steel plant and Phuong Nam paper pulp mill – have been stalled due to cost overruns and lack of operating capital.

The three remaining projects, namely Dung Quat and Binh Phuoc bio-fuel plants, and Dinh Vu polyester fiber factory, have been put on hold as they are sitting on a mountain of debt.

The total original investment capital of the 12 projects was VND43.67 trillion, which was later adjusted up 45.65% to VND63.61 trillion (US$2.7 billion at the current foreign exchange rate). Of this sum, VND14.35 trillion, or 22.56%, was their equity, while their loans made up 74.6%, about VND47.45 trillion, and the remaining 2.84% came from other sources.

Loans from domestic banks totaled more than VND41.8 trillion, including VND16.8 trillion from the Vietnam Development Bank and VND6.6 trillion from foreign lenders with Government guarantees.

The accumulated losses incurred by 10 projects that are operational or were suspended by end-2016 amounted to more than VND16.12 trillion. Total assets of the 12 projects are VND57.68 trillion and their total debts are more than VND55 trillion.

The total disbursed capital of three half-done projects is around VND8.61 trillion, compared to the estimated VND13.06 trillion.

According to the report, some of the projects have been rescued. Particularly, four fertilizer projects of Vietnam National Chemical Group have returned to normal production.

Viet Trung steel mill has reported profit since March this year, with January-June profit estimated at VND67 billion, and paid VND293 billion in taxes to the State.

The State Capital Investment Corporation (SCIC) has withdrawn VND1 trillion from phase two of Thai Nguyen steel plant project developed by Thai Nguyen Iron and Steel Joint Stock Corporation (TISCO).

SGT