Vietnam advances $97 million to cover state-owned paper mill’s debt

A recent government report says it has advanced about 82.6 million euros ($97 million) to the state-owned Vietnam Paper Corporation (VINAPACO) to pay for debts incurred by its project, the Phuong Nam Pulp Mill in the southern province of Long An.

Construction of the mill began in 2004 with an initial investment of VND1.49 trillion ($66.3 million), which the Ministry of Transport borrowed from a foreign institution.

The mill was expected to produce the best quality pulp in Vietnam, reaching European standards. However, its construction stalled in 2008 due to insufficient capital.

In 2009, the government transferred the project to VINAPACO. The expected cost of the project doubled to VND3.4 trillion ($149 million).

After taking over the mill, VINAPACO completed construction and put it on a test run, but the installed equipment line did not work with local material. The mill has been dormant since 2012.

VINAPACO organized three auctions of the mill in 2017, but there were no takers. It plans another auction in the second quarter this year. The project’s remaining debt is VND2.7 trillion ($115.5 million).

The Phuong Nam Pulp Mill is among the 12 largest failed projects of Vietnamese state-owned companies. Their total debts amounted to VND58.5 trillion ($2.5 billion) as of last May, according to the Ministry of Industry and Trade.