Deputy Prime Minister Le Minh Khai works with Dung Quat Shipbuilding Industry Company

(Baoquangngai.vn) - On the morning of April 5, Secretary of the Party Central Committee, Deputy Prime Minister Le Minh Khai conducted a site survey and worked with Dung Quat Shipbuilding Industry Company Limited (DQS) in Dung Quat Economic Zone. Accompanying the delegation were representatives of leaders of central ministries and branches. On the side of Quang Ngai province, Chairman of the Provincial People's Committee Dang Van Minh and leaders of relevant departments and branches attended the working session.

At the meeting, the leaders of the Vietnam Oil and Gas Group (PVN) reported to the Secretary of the Party Central Committee, Deputy Prime Minister Le Minh Khai on the operation of DQS since the handover to PVN. Dung Quat Shipbuilding Industry Company Limited was established on February 20, 2006, under the Vietnam Shipbuilding Industry Group (Vinashin). The company operates in the main business lines of building and repairing ships, equipment and floating vehicles. The registered charter capital is VND 3,758 billion.

Loss before handover to PVN

From July 1, 2010, DQS was transferred from Vinashin to PVN according to the Prime Minister's decision. At this time, DQS had 2,340 employees. Due to the stagnation of production and business, the jobs and lives of workers were seriously affected. All 15 projects, with a total investment of more than VND 9,900 billion, were suspended because the company was unable to arrange and balance capital. By June 20, 2010, DQS had lost about VND 3,800 billion, with total debt of VND 7,440 billion.

Party Central Committee Secretary, Deputy Prime Minister Le Minh Khai works at Dung Quat Shipbuilding Industry Company Limited.

After receiving the transfer of DQS from Vinashin, PVN provided 1,915 billion VND in charter capital to DQS, supporting more than 3,400 billion VND for the company to repay debts to banks and credit institutions. Conducted mergers, dissolutions, and transfers of DQS member units to PVN internal units with suitable business lines. At the same time, actively directed units in the industry to create favorable conditions for the company to operate and create jobs for workers.

Along with that, DQS has proactively expanded the market, worked with domestic and foreign ship owners to seek more repair contracts, reduced dependence on units in the industry, and gradually overcome difficulties. From 2010 to now, DQS's total revenue has reached VND 8,616 billion. The total number of employees has been reduced to 657 people, with stable income. However, the company still has negative profit results, due to potential costs before the transfer and unresolved financial problems, resulting in a loss of more than VND 2,600 billion.

Deputy General Director of Vietnam Oil and Gas Group reported at the meeting.

“The loss from the handover stage until now is mainly due to DQS having to deal with potential risks arising from before the handover stage. However, at that time, due to limitations, we had not yet determined, depreciated assets that were not needed or could not be used, and incurred high financial costs. Basically, if we did not have to incur these costs, DQS's production and business results would have offset operating costs,” said PVN Deputy General Director Pham Tien Dung.

Proposed restructuring plan for DQS

At the meeting, PVN leaders presented options for handling DQS according to the Government's direction, including converting ownership of DQS through valuation, auctioning assets and debts; or bankrupting DQS according to the law.

Specifically, according to Decision No. 1468 of the Prime Minister issued on September 29, 2017 approving the "Project to handle the existing problems and weaknesses of a number of projects and enterprises with slow progress and low efficiency in the industry and trade sector" (Project 1468), DQS must be converted into ownership through valuation and auction of assets and debts. Up to now, DQS has hired a consulting unit to determine the value of the enterprise; signed a legal consulting contract to find an effective solution to handle the existing problems and restructure the enterprise according to the current status of DQS; carried out procedures to liquidate unnecessary assets; successfully liquidated 9 packages of inventory equipment and supplies, with a total settled value of more than 44 billion VND.

Dung Quat Shipbuilding Industry Company Limited is having many problems and shortcomings that need to be resolved.

PVN Deputy General Director Pham Tien Dung said that the conditions for implementing the regulations in Project 1468 have not been completed due to legal and authority issues. The existing problems and difficulties in the financial situation of DQS from before the time of handover to PVN have not been resolved. In addition, a suitable partner interested in receiving the capital transfer has not been found. For the above reasons, it is very difficult to handle DQS according to the ownership conversion plan through valuation and auction of assets and debts.

Option 2 is to bankrupt DQS according to legal regulations. Currently, PVN has not implemented this option because according to calculations, if DQS goes bankrupt at the present time, PVN will lose more than 5,700 billion VND in capital. This cost does not include the costs to be paid to employees when the enterprise goes bankrupt and the increase or decrease in value of assets and debts. The social consequence that occurs at the same time is that nearly 700 employees will lose their jobs and have no income. Option 2 has the disadvantage of not preserving capital, affecting the lives of employees.

In the spirit of choosing the plan to minimize damage to the state and ensure jobs and livelihoods for hundreds of workers, PVN proposed a plan to restructure DQS; handle financial and asset issues, debt forgiveness and debt extension to maintain production and business activities.

Chairman of the Provincial People's Committee Dang Van Minh spoke at the meeting.

During the discussion at the meeting, many delegates agreed with this plan. Chairman of the Provincial People's Committee Dang Van Minh emphasized that the province hopes that the Government will choose a plan to resolve the problems related to DQS as soon as possible, not to let this situation drag on. Quang Ngai agrees with the proposal to maintain DQS operations according to the restructuring plan. During the resolution process, the province is ready to implement the central government's direction and actively support DQS's operations. Thereby, maximizing the advantages of the deep-water port in Dung Quat Economic Zone and ensuring social security, creating jobs for DQS workers.

Concluding the meeting, Deputy Prime Minister Le Minh Khai stated that the financial imbalance of DQS has been going on for many years. After receiving the transfer of DQS from Vinashin, PVN has made efforts to revive the company's operations. The Government has also actively directed to remove difficulties, but DQS still does not operate as planned. Opinions at the meeting clearly stated the pros and cons of the solutions to DQS.

Party Central Committee Secretary, Deputy Prime Minister Le Minh Khai delivered a concluding speech at the meeting.

The Deputy Prime Minister requested that after this working session, PVN and the Capital Management Committee should accept the responsible and appropriate opinions of the leaders of ministries, branches and the People's Committee of Quang Ngai province, complete the DQS handling plan and submit it to the Prime Minister for approval to report to the Politburo in June 2023. The requirement is that the report must be honest, objective, present specific feasible and optimal plans, and closely follow the Government's direction in Project 1468.

Central ministries and branches must coordinate well, actively support PVN and be responsible for resolving and implementing tasks related to the final handling of DQS according to the direction of the Politburo. Problems related to equipment, assets as well as related labor and land must also be resolved thoroughly, publicly and transparently...

Some photos of Party Central Committee Secretary, Deputy Prime Minister Le Minh Khai's field survey at DQS: