Photo: Duc Anh
MoIT to review operations after accumulated losses total $90 million.
The Ministry of Industry and Trade (MoIT) is to establish a team to inspect the Ninh Binh Nitrogenous Fertilizer Plant this year after a number of loss-making years, Minister of Industry and Trade Tran Tuan Anh announced on June 6.
Manufacturing efficiency has been a major issue, the Minister stressed.
While the planned investment has been completed the plant is yet to submit final accounts. Its debts have had a major impact on its operations and manufacturing as well as on its investor, the Vietnam National Chemical Group (Vinachem).
For this reason Mr. Tuan Anh has requested Vinachem conduct a review of the plant’s efficiency and judge its future prospects. The inspection team is to act quickly and the ministry will then establish its final accounts and identify development plans.
The minister acknowledged that the plant has had to cope with difficulties presented by its nitrogen technology, which is produced from coal. The Chemical Department at MoIT has been assigned to evaluate the technology.
He also asked Vinachem to prepare plans to prevent the appearance of counterfeit fertilizer. “Counterfeit fertilizer presents a range of difficulties for genuine producers,” Mr. Tuan Anh said. “The Chemical Department is to cooperate with Steering Committee 389 [the National Steering on the Prevention and Control of Smuggling, Trade Fraud and Fake Commodities] to prevent the smuggling and counterfeiting of fertilizer.”
At the same time, the Export and Import Department under MoIT is to offer solutions for the State management of illegally imported fertilizers. It will cooperate with the Ministry of Agricultural and Rural Development to create legal documents for the proper management of fertilizer.
Vinachem acknowledges that the plant has some problems. It has held negotiations 12 times with the plant’s contractor, without result. A restructuring plan is to be submitted to MoIT and the Prime Minister.
It has blamed imported Chinese production lines for increasing production costs, which it says are only of medium quality. Having installed Chinese production lines, the purchase of other equipment and facilities depends on Chinese contractors and the production lines consume a great deal of materials.
The plant was built in 2008 at the Khanh Phu Industrial Zone in northern Ninh Binh province with investment of $667 million. It was expected to achieve annual output of 560,000 tonnes. Along with the Ca Mau, Phu My, and Ha Bac fertilizer plants, Ninh Binh was expected to meet demand for urea nitrogen fertilizer and help Vietnam stabilize its fertilizer resources.
The plant has recorded losses since opening in 2012. In the first year its losses were VND75 billion ($3.3 million), then in 2013 VND759 billion ($33.9 million), in 2014 VND500 billion ($22.3 million) and in 2015 VND370 billion ($16.5 million). Accumulated losses total VND2 trillion ($89.5 million).
Due to difficulties in sales and following a number of operational incidents, the plant was closed last March. Four hundred of its 1,000 workers lost their jobs.