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Vinachem’s loss-making projects grapple with huge interest payments
The Saigon Times Daily
Tuesday,  Mar 13, 2018,23:27 (GMT+7)

Vinachem’s loss-making projects grapple with huge interest payments

The Saigon Times Daily

HCMC – Loss-making projects under Vietnam National Chemical Group (Vinachem) are facing an enormous financial burden in 2018-2020 due mostly to huge interest payment obligations, news website Dan Tri reported.

Vinachem has recently presented its business development plans in the next three years for four poor-performing projects.

Of the 12 loss-making projects under the management of the Ministry of Industry and Trade, four belong to Vinachem, namely Ninh Binh nitrogenous fertilizer plant, Ha Bac nitrogenous fertilizer and chemicals factory, DAP-Vinachem and DAP 2-Vinachem.

At the Ha Bac project, the total loan interest it must pay towards 2020 is over VND2.3 trillion (or VND767 billion a year).

The Ninh Binh project is obliged to pay VND1.11 trillion in interest, with VND491 billion of it due this year, VND368 billion next year and VND253 billion in 2020. The respective interest amounts of the DAP 2 project in the next three years will be VND269 billion, VND275 billion and VND272 billion.

The DAP-Vinachem project will have to pay VND9 billion in interest this year and be free from the interest payment obligation as from next year. This is also the best performing project of Vinachem as it reported profit last year.

To assist these projects, Vinachem has requested the Government and ministries to approve some proposals, including loan repayments. In particular, Vinachem has proposed extending loan terms to 20 years, paying principles first and interest later, and offering interest exemptions for overdue loans.

In addition, Vinachem wants interest rates lowered, with 3% per year towards 2022. As from 2023, for loans with annual rates above 8.55%, the rates should be adjusted down to the levels applicable to State-funded investment projects.

Besides asking for assistance with loans at Vietnam Development Bank, Vinachem is looking for support to deal with loans at other commercial banks. 

Last year, the four projects reported lower losses, with Ninh Binh nitrogenous fertilizer, Ha Bac nitrogenous fertilizer and DAP 2 respectively incurring losses of VND933 billion, down by nearly VND200 billion, VND602 billion, down VND449 billion, and VND530 billion, down VND376 billion,. Meanwhile, the DAP-Vinachem recorded a profit of VND15 billion.

Vinachem said it believed these projects would be able to perform better if its proposals are approved.

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