VietNamNet Bridge – The Ministry of Trade thinks that it is necessary to reserve 100,000 tonnes of urea, while the Vietnam Fertiliser Association (VFA) said that there is no need to do that.
The Ministry of Trade (MoT) has proposed the Government to assign the Phu My Fertiliser Plant to keep 100,000 tonnes of urea in stocks until the Ca Mau Power – Fertiliser Plant becomes operational.
However, the proposal has been facing strong opposition from the Vietnam Fertiliser Association, which said that it would be a waste to reserve urea while the product can be supplied from domestic production and imports.
As such, the Phu My plant will have to have a regular reserve of 100,000 tonnes in stock for three years.
MoT fears that the market would face the urea shortage, which will have a bad impact on agricultural production. Meanwhile, Nguyen Dinh Hac Thuy, Deputy Chairman of VFA said: “It is unreasonable to store 100,000 tonnes of urea for several years. The demand is decreasing in the country, while the supply is enough to feed the demand”.
The statistics from VFA said that in 2006, the total demand for urea was just 1.6-1.7mil tones a year. Domestic sources can supply 800,000 tonnes, including 650,000 tonnes from the Phu My Fertiliser Plant and 150,000 tonnes from the Ha Bac Fertiliser Plant. Besides, the imports and stocks would provide 850,000 tonnes, enough to satisfy domestic demand.
In August, September and October 2007, the Phu My Fertiliser Plant can produce nearly 200,000 tonnes, while Ha Bac can provide 50,000 tonnes. Besides, the market would have another supply - 2-2,500 tonnes of urea a day from imports in small scale from China through the Mong Cai border gate. It would take two months only to import 100,000 tonnes of urea to satisfy the domestic demand. Mr Thuy stressed that fertilizer would come as soon as the demand appears, and there is no need to keep the product in stocks.
Currently, one tonne of urea is priced at VND4.7mil ($293.75), and if keeping 100,000 tonnes in stocks, it would need the big capital of VND470bil ($29.37mil), and if counting on the bank interest rate of 10% per annum, the total loss would be VND47bil ($2.93mil).
According to Pham Huu Tien, Deputy Director General of the Phu My Fertiliser Plant, in addition to the loss of VND47bil a year, the plant would bear other expenses including the storage and preservation, estimated at VND80bil a year.
Regarding the implementation of the Ca Mau Power – Fertiliser plant project, an official from the Ministry of Industry said that the project is still on paper, construction and installation would last three years. If so, the total loss the Phu My plant would suffer may reach VND240bil ($15mil) for three years.
An official from VFA recalled the story occurred three years ago. At that time, the state management authority asked to reserve 100,000 tonnes of urea. However, just 3 months later, the Ministry of Trade asked 3 corporations that reserved urea to sell the 100,000 tonnes as the price fell down dramatically. As the result, the three corporations incurred the loss of VND23bil ($1.43mil).
(Source: TBKTVN) | 
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