The Ministry of Industry and Trade has pointed out the causes for the USD90m losses at a fertiliser plant in Ninh Binh Province that forced it to halt operation four years after being put into use.

Ninh Binh fertiliser plant incurs a USD90m loss

The ministry blamed weak management and slow actions by the Vietnam National Chemical Group (Vinachem) and Ninh Binh Nitrogenous Fertiliser Company. 

According to the ministry, interest on the project’s loans went up to VND527bn (USD23m) as construction crept behind schedule. 

In addition, the investor agreeing to let the contractor use 251,000 tonnes of coal more than the agreed amount during the pilot stage also increased costs.   

As of December 31, 2015, the plant had 997 employees while reports pointed out that any number more than 603 will make input costs jump. Vocational skills were also criticised.

The ministry emphasised the weak management skills which lead to disparity in data in the inventory and the stored and used materials of the plant. 

The real values of the assets and consumable costs are not recorded correctly, decreasing the plant's profits. 

The prices of the products and actual costs are different from the research reports because they couldn't predict the material prices and demand accurately.

In addition, the equipment proved unstable and failed to meet the designed capacity. 

The plant suspended production for months for repair because of various reasons including technical problems and bad weather. 

The company depends greatly on bank loans to operate which has also blocked it from reducing costs.

The Vietnam National Chemical Group (Vinachem) plant is located at Khanh Phu Industrial Park. Starting operations in 2012, the plant was designed to have an annual capacity of 560,000 tonnes of fertiliser. 

Until now, up to over 50,000 tonnes of fertiliser valued at VND300 billion remains in stock.

Since 2012, the plant has made total losses of USD90 million. Over the past month, it has had to halt its operations, which is attributed to higher production costs and slow sales. According to the report, the plant would start to be profitable in 2015, however, it continued to incur a loss of VND364bn. 

In last July, it suffered VND19 billion in damage caused by Mirinae Storm. If all operations are halted, the plant would lose VND1.2 trillion in 2017. 

But the losses may be cut by VND250bn if it can produce 290,000 tonnes of urea.

Vinachem and Ninh Binh Nitrogenous Fertiliser Company proposed to extend loan repayment deadline to 20 years and reduce interest rates.

Dtinews