PetroVietnam appoints top official to save $325-million fiber plant

By Toan Dao   April 5, 2016 | 07:19 pm GMT+7
PetroVietnam appoints top official to save $325-million fiber plant
PVTex Dinh Vu JSC's Chairman & CEO Nguyen Van Chat (right). Photo: PetroVietnam

State-owned PetroVietnam has appointed a senior official from the Dung Quat Oil Refinery to manage a $325-million fiber plant in an effort to save the project from possible bankruptcy.

Nguyen Van Chat, deputy director of Binh Son Refining and Petrochemical, the operator of the Dung Quat Oil Refinery, was named chairman of the board of directors and CEO of PVTex Dinh Vu JSC on April 4, PetroVietnam said in a statement on Tuesday.

PVTex Dinh Vu is the operator of the fiber plant located in Dinh Vu in the northern city of Hai Phong. PetroVietnam has a 74 percent stake in the fiber plant while the rest is held by PetroVietnam Fertilizer and Chemicals Corp.

Chat is one of the few people in Vietnam capable of managing an oil refinery, according to PetroVietnam.

“We strongly believe Chat’s management capacity and experience will help save PVTex, which has hit rock bottom,” said Nguyen Quoc Khanh, chairman of the board of directors at PetroVietnam.

“I ask PVTex’s leaders to make every effort to support Nguyen Van Chat so operations can resume swiftly at the plant. You need to think in a different way and dare to implement practical measures to address the problems facing PVTex’s business. Within six months, you have to cut losses and initiate new expansion measures to bring a new face to the plant,” Khanh said.

“PetroVietnam has pioneered this first fiber plant in our country. The plant has produced quality products for Vietnamese garment companies, and we now have more opportunities with Vietnam joining the Trans-Pacific Partnership. There is no reason PVTex should fail,” Khanh added.

The plant began commercial operations in May 2014 but suspended production in September last year. PVTex planned to resume operations in the first quarter of 2016 but the plant has yet to reopen.

petrovietnam-appoints-top-official-to-save-325-million-fiber-plant

The fiber plant lies dormant. 

According to a PetroVietnam report, PVTex Dinh Vu JSC incurred losses of VND1.255 trillion ($55.5 million) last year, even higher than the VND1.085 trillion it lost the previous year. PVTex’s poor financial health has made it impossible for the firm to pay total bank debts of $221.3 million, including $70.7 million in short-term loans.

One of the main reasons behind these losses was the significant fall in 2015 global cotton prices that forced the already low prices of PVTex’s products to sink even further. In addition, volatile exchange rates last year inflated the cost of input materials, driving the company to face stiff competition from rivals.

PVTex expects to make a loss of VND501 billion in 2016, a loss of VND112 billion in 2017 and then break even and start making a profit in 2018.

 
 
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