Notorious Chu Lai Soda closing might cost $90 million for bankers

10:28 | 17/12/2017
Banks, including state-owned Bank for Agriculture and Rural Development (Agribank), are worried that Chu Lai Soda Processing JSC (Chu Lai Soda) will default on its VND2 trillion ($88.1 million) debt as the soda processing factory has been forced to suspend its operations since August 2016 due to violations in discharge, according to newswire Baolaodong.
Chu Lai Soda has been suspended in August 2016 over recurring environmental violations

In 2010, Chu Lai Soda’s soda processing factory with an annual capacity of 200,000 tonnes was welcomed as the country was importing millions of tonnes of soda every year.

The central province of Quang Nam, where Chu Lai Soda intended to develop the factory, was lured in by the company’s promise to generate jobs for 400 local workers and pay VND60 billion a year to the province’s budget once the factory comes into operation.

In addition, banks located in the province, including Agribank, had numerous benefits once the large-scale project was approved. Thus, Agribank decided to provide a loan of VND1.6 trillion ($70.48 million) and another bank gave VND400 billion ($17.6 million) to Chu Lai Soda.

As a result, in April 2010, the construction of the Chu Lai Soda processing factory was kicked off on an area of 60 hectares at Chu Lai Open Economic Zone with the investment capital of VND2.3 trillion ($101.3 million), VND2 trillion ($88.1 million) of which came from loans. The factory was expected to start operations after two years of construction.

In June 2015, after five years of delay in construction, the factory came into pilot operation. However, after a short time, hundreds of nearby households complained that their daily life was affected by environmental pollution caused by the factory.

According to the residents’ complaints, the factory discharged wastewater directly into the river, causing severe water, air, and noise pollution. The fish in the river already started dying en masse.

Furthermore, the wastewater was not only dumped into the river, but also into residents' fishery ponds and fields located at the back of the factory, also killing all flora and fauna.

After receiving complaints from several households near the facility, the Ministry of Natural Resources and Environment (MoNRE) requested the Department of Central and Central Highlands Environment to inspect the company’s activities.

According to the department’s inspection record, Chu Lai Soda discharged coal and black carbon, both substances banned by regulations, into the environment. Along with violations of the discharging process guidelines, the company did not build appropriate wastewater and solid waste treatment facilities.

As a result, the authorities issued a fine of VND730 million ($32.2 million) to the factory. Simultaneously, the company had to suspend its operations until it installed wastewater and solid waste treatment facilities.

However, in June 2016, local residents protested Chu Lai Soda’s relapse into discharging untreated wastewater into the local river. Tempers ran so high that residents threatened to take matters into their hands and block the company’s wastewater pipes.

At the time, in an unannounced inspection, the inspection team of the Vietnam Environment Administration detected that Chu Lai Soda continued to discharge untreated wastewater into the river, despite having been closed to install proper treatment facilities.

According to the department, Chu Lai Soda had a seriously negative track record of environmental violations. Notably, along with the illegal discharge, the company had yet to carry out measures prescribed in its environmental impact assessment report and failed to collect the harmful waste produced by its manufacturing activities.

In addition, the company had delayed in paying the VND731 million ($32,796) fine incurred for the previous violation. Accordingly, it paid VND200 million ($8,973) only.

With its relapse into discharging untreated wastewater into the river and delay in fine payment, the authorities asked the factory to suspend its operations from August 2016.

Since the factory was suspended, 400 employees lost their jobs, almost all of whom have been waiting for their salaries for three or four months.

According to Ha Thach, director of Agribank’s Quang Nam branch, the bank has been making efforts to co-operate with the investor to resume the factory’s operation with little effect, making it difficult to revocer the banks’ VND2 trillion ($88.1 million).

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By By Ha Vy

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