Wrongdoings in fertilizer plant expansion inflict $124 mln loss
The Government Inspectorate says many wrongdoings in a fertilizer plant expansion project of the Vinachem group resulted in losses of over VND2.89 trillion ($124 million).
Workers package fertilizer at Ha Bac Fertilizer Plant in Bac Giang Province. Photo acquired by VnExpress.
It said in a recent release that the expansion project involving Ha Bac Fertilizer Plant in the northern Bac Giang Province has seen costs ballooning 44.9 percent to $568 million.
Hanichemco, formally Ha Bac Nitrogenous Fertilizer and Chemical Company Limited, used loans to fund more than 80 percent of the expansion costs, leading to high interest and therefore losses, the inspectorate said. The project began in 2010 and was completed in 2015.
Although the company, a subsidiary of state-owned chemical firm Vietnam National Chemical Group (Vinachem), did not have the ability to increase its investment, its proposal was still approved by Vinachem, which was a contravention of construction regulations.
The company also violated regulations on bidding and evaluation; and had increased the total investment amount without grounds, leading to accumulated losses of VND2.89 trillion ($124 million) as of June 2019.
There are signs of criminal irresponsibility causing grave consequences that needs to be punished, the inspectorate said.
Hanichemco, one of the first producers of fertilizers in Vietnam which was established in the 1960s, started recording worsening balance sheets after its expansion was completed in 2015.
The expansion is one of 12 ailing projects of state-owned companies that have been identified as resulting in losses of trillions of dong (VND1 trillion = $43 million). As many as four of the 12 are construction and expansion projects of fertilizer plants belonging to Vinachem.
In September 2017, Vietnam party leaders had dismissed the then Vinachem chairman, Nguyen Anh Dung, from all positions in the Communist Party of Vietnam for allowing major wrongdoings to happen with the four projects.