PVN builds "treatment regimen" for ineffective projects

Dinh Vu Polyester Fiber Plant

Complete the treatment plan

In 2017, the Ministry of Industry and Trade set the Vietnam Oil and Gas Group to "complete" the plan to handle 5 ineffective projects: Dinh Vu Polyester Fiber Plant (PVTEX); Dung Quat Bio-ethanol fuel Project; Binh Phuoc Ethanol Project; Phu Tho Ethanol Project and Dung Quat Shipyard Project.

It can be seen that this is a very difficult task for PVN because besides objective factors such as the economy is still difficult, oil prices plunge, fiber and biofuel markets are less attractive to the domestic investors..., there are many difficulties and problems in terms of mechanism, especially issues of financial mechanism and import tax.

From this reality, following the conclusion of the Politburo, the guidance of the Standing Government and Deputy Prime Minister Vuong Dinh Hue, on July 7, 2017, PVN held a meeting to discuss solutions to remove problems, handle ineffective projects of the Group.

At the meeting, PVN has established special teams to deal with each ineffective project, which is clearly defining responsibilities of each individual and unit participating in the teams.

After 2 months of fierce battle, under the direction of the Government, the Ministry of Industry and Trade, the review, examination, and assessment of the current situation and the “treatment regimen” for ineffective projects have been done.

Accordingly, on July 25, 2017, for the project of Dinh Vu Polyester Fiber Plant (PVTex), the Vietnam Oil and Gas Group reported to the Steering Committee of the Government and the Ministry of Industry and Trade about the plan for cooperation with a foreign partner for joint production.

Currently, PVTex's shareholders are waiting for the decision of the Steering Committee of the Government and the Ministry of Industry and Trade to implement the plan. During waiting for the decision of the Steering Committee of the Government and the Ministry of Industry and Trade, PVN has instructed its representatives at PVTEX to drastically implement the preparations to restart the factory.

For example, PVN/ VTEX has worked with Vinatex on cooperation in the coming period. For details, starting from September 6, 2017, the representatives of PVN/PVTEX will survey and contact its potential product sales partners to implement the market work, as planned, the survey and assessment will be closed before September 15, 2017…

For Dung Quat Bio-Ethanol fuel Project (BSR-BF), after conducting a field survey at Tung Lam ethanol plants, Tay Ninh Wheat Starch, on August 25, 2017, the owner of BSR-BF is digging the land to build a lake for cigars to handle wastewater problem. At the same time, BSR-BF and shareholders have invited investors to participate in business cooperation to operate the factory; it also has issued a letter of invitation to cooperate in operating production and business. At present, there are 3 investors who are interested are Tin Thanh Industrial Electricity and Steam Ltd, Tung Lam Co. Ltd and Tocontap. According to the plan, investors receive the dossier on September 5, 2017.

For the Binh Phuoc ethanol project (OBF), PVN's team in charge on the project and PVOil have directly surveyed the factory and worked with the OBF Owner and the Toyo (Thailand shareholders), Licogi 16.

On August 24, 2017, the shareholders of OBF (PVOil, Toyo, Licogi 16) held an extended membership meeting of OBF members invited Tung Lam Company to review and evaluate the operation plan of the factory. At the meeting, representatives of shareholders agreed to re-operate the Binh Phuoc Ethanol Plant.

Some shareholders such as Toyo, Licogi 16... confirm that they will make procedures needed to continue to contribute capital to help the OBF have finance to the repair and technical conversion to bring the plant into operation; In 2018, PVOil and other shareholders will be responsible for arranging capital for OBF production, equivalent to a maximum of 91.346 billion vnd by payable in advance for the OBF’s E100 and/or working with OBF supplier for raw cassava chip in advance to meet production requirements...

Determined to handle drastically

With the Phu Tho Ethanol Biofuel Project (PVB), the special task Team visited the project site and worked with PVB Investor and the contractor to check the status of the project. On July 27, 2017, PVB's Board of Directors held a meeting in which PVB's Board of Directors was requesting to withdraw and authorize PVOil to be a major shareholder of PVB.

Currently, there are two groups of investors, are Thai Son Investment JSC and Mepcom Offshore and Marine Pte. Ltd. - a subsidiary of MEPCOM Group (Singapore) interested in the project. Notably, Mepcom Offshore and Marine Pte proposed to cooperate in the direction that Mepcom and its strategic partner will buy shares of existing shareholders at PVB to provide capital under the Build-Own-Operate project model. PVOil maintains equity and will be a shareholder with Mepcom and a strategic partner in the Phu Tho Biofuel Project.

At the same time, PVOil has also implemented the appraisal of the value of the enterprise/capital contribution, the construction of the capital withdrawal plan, and so far, it has the preliminary appraisal results. In the coming time, PVN/PVOil will continue to exchange and provide project information to Thai Son and Mepcom partners to develop investment projects as well as seek and work with other partners; At the same time, PVOil continues to carry out the asset valuation work and develop a plan to divest.

On July 25, 2017, for the PVD's Dung Quat Shipyard Project, PVN reported to Deputy Prime Minister Vuong Dinh Hue and the Ministry of Industry and Trade about the solution to remove difficulties for Dung Quat Information Technology One Member Co., Ltd.

In the above document, PetroVietnam has made 3 recommendations to allow the Vietnam Oil and Gas Group to sell the enterprises stipulated in Decree No. 128/2014/ND-CP dated December 31, 2014, by the Government on selling and delivering and transferring of state-owned enterprises. In case of unsuccessful sale, the bankruptcy auction will be immediately implemented; Authorizing the Board of Members of the Vietnam Oil and Gas Group to decide on all issues related to the implementation of the approved plan; There is a mechanism for DQS to carry out the work in accordance with the functions/duties of DQS when the Vietnam Oil and Gas Group and other units in the Vietnam Oil and Gas Group are in need, to ensure the life, job and stabilize the ideology and psychology of DQS officials and employees. These recommendations of the Group are waiting for the direction of competent authorities.

In addition, PVN is also aggressively implementing the settlement of 104,000 DWT vessels; handles non-use assets, awaiting liquidation as prescribed for debt repayment and for business production and reduction of depreciation cost.

Thus, for the projects being deployed, PVN has focused on the drastic measures to handle the weak projects (Dinh Vu fiber, 3 biofuel projects, Dung Quat shipbuilding) under the spirit of the Politburo, the direction of the Standing Government and Deputy Prime Minister Vuong Dinh Hue, of the Ministry of Industry and Trade.

According to PVN General Director Nguyen Vu Truong Son, PVN is aggressively implementing the Government's guidelines. With ethanol projects, the Group has a plan to re-operate and determine to January 1, 2018, it will have products. By January 1, 2018, with the state policies regulating the implementation of gasoline E5 into consumption is a favorable condition for the Group to launch the running of the project. PVN also has partners committed to accompanying with the Group to have products on January 1, 2018.

Phu Tho ethanol alone, due to it is an unfinished project, with the orientation of the Government seeking to transfer shares or sell assets, PVN has found some potential partners and PVN is implementing the plan of pricing to sell that property.