Little progress made on salvage of 'infamous twelve' failed mega projects
Little progress made on salvage of 'infamous twelve' failed mega projects
Little progress has been made to salvage the 'infamous twelve', a series of failed mega economic projects under the management of the Ministry of Industry and Trade, despite numerous attempts by various government agencies in the last four years to revive the projects.
The twelve, which have cost the State billions of dollars, have always been high on the priority list of the Government's effort to restructure State-owned corporations during the 2016-20 period.
According to the latest report from the Government, only three out of the twelve: DAP-1 Hai Phong (a fertiliser factory) and two bioenergy plants in the provinces of Phu Tho and Binh Phuoc, have seen improvement in their performance.
Several of the twelve have begun operating though after experiencing delay after delay due to a mirage of technical and financial problems. Several have been put on hold completely with no reboot schedule insight, and others did not even finish their construction phase.
According to the ministry, at least five of the twelve are currently being held back in legal limbo after multiple negotiation attempts failed to resolve issues with their EPC (Engineering, Procurement and Construction) contracts. No amount of the State's investment could be retrieved before said issues were addressed.
A restructuring effort at Thai Nguyen Steel Corporation (TISCO), Viet-Trung Mining and Metallurgy Company (VTM) and Dinh Vu Polyester Plant has been put on hold for now due to a lack of capital. By the end of the first quarter of 2021, TISCO's total liability is due to reach VND7.73 trillion or nearly 80 per cent of its total assets, all on top of nearly VND1 billion it has to pay every day in interest alone.
Meanwhile, VTM, after a period of profit-making, has lapsed into the red. The company's board blamed the pandemic and the tighter import/export of minerals as the main factors.
For a majority of the twelve, efforts to salvage them have slowed to a crawl as governmental agencies showed they possessed little political will to make breakthroughs. Economists have long pointed out the underlying cause, which is the agencies' save-the-State-budget-at-all-costs attitude. Attempts to gloss over or trivialise losses to the State budget in official accounting have been made, a far departure from the grim reality of the projects.
For some of the twelve such as the Phuong Nam Pulp Mill, there doesn't seem to be a way out. The mill, which has cost over VND3 trillion by the end of 2014 according to a report by the Nhan Dan (People) newspaper, has not even been put to use, except for a short pilot run in 2012 during which it had experienced a mirage of technical issues and had to be shut down.
Since then the mill has been put on sale at least four times without success. It has been left unused for so long the Long An provincial government at one time submitted a proposal to turn it into a residential project.
A government report showed by the end of last year, the twelve's total liability has reached over VND63.3 trillion or US$ 2.76 billion, with estimated capital loss in the range of VND7.2 trillion.
