The state resolutely refused to save the failing VND8 trillion ($361.4 million) Thai Nguyen Iron and Steel JSC (TISCO)’s iron and steel plant-phase 2.

The decision was announced by the Prime Minister (PM) Nguyen Xuan Phuc at the recent meeting to review the Ministry of Industry and Trade (MoIT)’s operation in the first half of 2016.

Phuc stressed that the state’s support policies should be changed to stop propping up weak and failing businesses.

“We will not bankroll bad businesses any more. We cannot keep on throwing thousands of billions of dong into projects like the TISCO plant,” Phuc said.

In May, the PM requested the MoIT to establish a working group to study potential solutions to save the project. Accordingly, the working group will build plans to sell the project or TISCO’s stake in it.

In addition, it must assess the feasibility of negotiations between TISCO and contractor China Metallurgical Group Corporation (MCC) to continue the implementation of the project, as well as comply plans to call for investors in case the two parties fail to reach an adequate compromise.

The MoIT had to submit its proposals to the PM before July 1. However, as of now, the MoIT has been delaying submitting solutions.

The plant’s construction was kicked off in 2007 under an engineering, procurement, and construction (EPC) contract with the initial investment capital of VND3.8 trillion ($170.4 million). The facility has a designed capacity of 500,000 metric tonnes of iron and steel products per year.

In 2009, the project’s expected cost increased from VND3.8 trillion ($170.4 million) to VND8 trillion ($361.4 million).

In 2012, China Metallurgical Group Corporation (MCC), decided to stop implementing the project and returned to China, claiming the capital increase was too high and the investor had difficulty whipping up capital after disbursing more than VND4.5 trillion ($216.35 million) for the project. Thus, the project’s construction has been delayed for four years.

On March 29, TISCO announced that it can arrange the necessary finances to continue the construction. However, TISCO has yet to lure MCC to the negotiation table.