Prime Minister Pham Minh Chinh inspects the reality of the Phase 2 expansion project of Thai Nguyen Iron and Steel Factory in July 2022. Photo: VGP

Requires definitive handling of outstanding issues

Reporting at the Prime Minister's meeting with the Commission and 19 economic groups and corporations under its control in March 2023, the Committee for the Management of State Capital at Enterprises said that a number of tasks which although there is no longer a long backlog as before, the time limit  for settlement is not guaranteed as prescribed; notmuch focus on giving strategic orientations and development plans to promote and orient enterprises to promote existing resources; there is no effective coordination mechanism with line ministries directly related to and affecting the operation of enterprises.

The report on verification of socio-economic development and state budget in 2022 and the first months of 2023 of the National Assembly's Economic Committee at the 5th session, the ongoing 15th National Assembly also emphasized that the restructuring, equitization of state-owned enterprises, arrangement and renewal of public non-business units have not been satisfactory. The role of state-owned economic groups has not been well promoted in large works and projects.

At the beginning of last May, Directive 12/CT-TTg of Prime Minister Pham Minh Chinh on tasks and solutions to renovate the operation of the Committee for State Capital Management at Enterprises and improve operational efficiency, promoting investment resources of 19 economic groups and state-owned corporations frankly pointed out, the Commission and 19 economic groups and state-owned corporations still have shortcomings and limit ations. In particular, economic groups and state-owned corporations still need to actively promote to full effect the resources of capital and assets assigned by the State, especially in speeding up the progress of large and important investment projects. Very few new projects have been started in recent periods.

Faced with this situation, the Directive requires the above-mentioned units to handle and complete the final settlement of backlog problems that have lasted for many years for projects and enterprises such asthe production expansion project of phase 2 of Thai Nguyen iron and steel factory, QuyXa iron ore mining and selection project and Lao Cai iron and steel factory project, Dung Quat Shipbuilding Industry One Member Limited Liability Company (DQS).

Calculating and developing a plan to overcome difficulties

The Committee for Management of State Capital at Enterprises had many working sessions, giving directions to restore operations for projects and enterprises that are still in difficulty.

For example, regarding the DQS project, according to a report by the Vietnam Oil and Gas Group (Petrovietnam), after receiving it from the Vietnam Shipbuilding Industry Group (Vinashin) from July 2010, the Group has re-implemented the project of DQS structure. From 2010 to now, 182 ships have been repaired, built or converted by DQS with 68 projects in the industry and 30 foreign projects with total revenue of over VND 8,000 billion. However, DQS is losing more than VND 2,600 billion due to the period before handing over.

Petrovietnam said that it had calculated options to overcome difficulties such as converting the valuation of DQS to auction properties; DQS bankruptcy plan in accordance with the law; continue to restructure DQS or establish a new unit on the basis of transferring the assets and human resources of DQS and liquidating the existing ones.

At a recent working session on the DQS project, Vice Chairman of the Committee Ho Sy Hung said that units must separate and remove all obstacles to DQS in order to have a long-term development project. On the basis of resolutely handling according to market principles and mechanisms, with the goal of solving problems and minimizing damage to the State, Petrovietnam needs to develop a plan to overcome difficulties and needs a comparison, comparing between the options, it is necessary to calculate and forecast the market before making a decision.

Similarly, the Phase 2 expansion project of Thai Nguyen Iron and Steel Factory (TISCO 2) is a key investment project invested by Thai Nguyen Iron and Steel Joint Stock Company (TISCO) and Thai Nguyen Iron and Steel Corporation Limited—Industrial Science of Metallurgy China (MCC) as the general contractor. The project started in September 2007 and is expected to be completed after 30 months, but it has not yet been implemented.

According to the Committee for Management of State Capital at Enterprises, this agency has drastically directed the State Capital Investment Corporation (SCIC), Vietnam Steel Corporation (VNSTEEL) and TISCO to discuss with MCC organizing negotiations in order to agree on a plan to definitively settle disputes/encumbrances of the EPC contract in the spirit of "harmonious benefits, shared risks". As a result, MCC sent a delegation to work directly in Vietnam to survey, evaluate, and discuss with relevant Vietnamese authorities and businesses on the TISCO 2 Project.

Previously, the Committee for the Management of State Capital at Enterprises also gave instructions to find a solution and remove difficulties for the project of mining and selecting iron ore from QuyXa mine, the Iron and Lao Cai Steel Plant (VTM Project). According to the assessment, VTM is a project with many incentives and advantages, especially in terms of raw materials as well as support mechanisms and policies. However, the performance could be better. Up to now, after more than seven years of operation, the Company has hada serious financial imbalance and a large accumulated loss.

Therefore, the representative of the Committee's leadership suggested that the joint venture parties need to be fully and deeply aware of their responsibilities for the existence of VTM; must participate in supporting VTM to restore production and business on the basis of respecting the joint venture contract, investment license and legal regulations. At the same time, it is necessary to make the most of all favorable conditions of the project to restart the Lao Cai iron and steel factory operation as soon as possible, ensuring efficiency.