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The problems of Quang Ngai biofuel plant fall in the final settlement stage of the project.

Difficulty in final settlement

Since the time of accepting, handing over and putting Quang Ngai Biofuel Plant project into operation in January 2014, after nearly two years, the plant operated seven production cycles with 151 running days of machine and operating capacity was only 54 percent of the designed capacity because the wastewater treatment work has not met requirements. In April 2015, the plant stopped production due to a lack of consuming market, low production efficiency and lack of capital. After much effort, this project restarted operations for the first phase in mid-October 2018 and for the second phase at the beginning of April 2019.

According to the Ministry of Industry and Trade, key problems of Quang Ngai biofuel plant fall in the final settlement stage of the project. In particular, it is because the wastewater treatment system has not been accepted, so it is not eligible to finalize the EPC contract and proceed to the final settlement. In addition, this is one of the projects encountering difficulties in the market for output products and input materials for production.

Regarding this issue, Member of the Board of Members, Director General of Vietnam Oil and Gas Group (PVN) Le Manh Hung said from October 14, 2018, after completing the support work for wastewater treatment, the plant has restarted operations and produced about 1,500 m3 of ethanol.

“Previously, the project could not be accepted because the wastewater treatment work was not completed. After that was handled, the acceptance must be implemented in parallel with production and business. Thus, the plant had to perform two tasks of plant acceptance and product trading at the same time. This plan was divided into three phases in 2019 with a total output of more than 20,000 m3 of ethanol. The handling of the EPC contract disputes for the project could only be done after acceptance of the plant," said Hung.

Solutions to stabilise raw material areas

According to PVN, it has sent officials and technical staff to the project and enterprises to support the handling of technical issues to prepare for reoperation of inactive plants. Decision No. 1468 / QD-TTg approving the "scheme on dealing with shortcomings and weaknesses of slow and ineffective projects and enterprises in the Industry and Trade sector" of the Prime Minister, stated that the best solution for Quang Ngai Biofuel Plant Project is to re-start the plant, then transfer it or divest from the project.

The Ministry of Industry and Trade said that the units have implemented this solution and so far, the plant has restarted operations. However, there are two major issues to be addressed. The first is disputes in the EPC contract and final settlement of the project. This is being implemented under the general direction of the Steering Committee. The second is a solution to stabilise raw material areas for stable and efficient production activities of the plant. This is one of the most basic issues to be handled.

In the future, the solution for this issue is focusing on the planning of the raw materials area, ensuring stable production for the plant. Accordingly, conducting surveys, assessing and working directly with the People's Committees of some Central Highlands provinces to identify the planning of cassava material areas for the plant.

“On that basis, it needs to consider signing the principle contract between the plant and the cassava growers, and it needs to have supervision and guarantee of the local authority to ensure the implementation of this contract,” said Ministry of Industry and Trade’s representative.