Quyết định 6868/QD-BCT

DECISION

APPROVING THE PLANNING FOR DEVELOPING THE PRODUCTION AND DISTRIBUTION SYSTEM OF FERTILIZER 2011 – 2020 AND THE ORIENTATION TOWARDS 2025

THE MINISTER OF INDUSTRY AND TRADE

Pursuant to the Government's Decree No. 189/2007/NĐ-CP on December 27, 2007 on defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade;

Pursuant to the Government's Decree No. 92/2006/NĐ-CP dated September 07, 2006 on the compilation, approval, and management of the master plans for socio-economic development, and the Government's Decree No. 04/2008/NĐ-CP dated January 11, 2008, amending and supplementing a number of articles of the Decree No. 92/2006/NĐ-CP;

According to  the direction from the Deputy Prime Minister Hoang Trung Hai in the Notice No. 133/TB-VPCP dated April 20, 2009 of the Government office on the scheme for developing and enhancing the State management of the distribution system on the current retail market and in the future, the Ministry of Industry and Trade shall compile and approve the Planning for developing the production and distribution system of essential commodities for production and life, including fertilizer;

At the proposal of the Directors of the Department of Chemicals and the Director of the Department of Planning,

DECIDES

Article 1. Approving the planning for developing the production and distribution system of fertilizer 2011 – 2020 and the orientation towards 2025. In particular:

1. Viewpoints on development

- Developing the fertilizer industry together with the development of the distribution system, efficiently utilizing the natural resources and protecting the environment, suitable for the planning for developing agriculture and relevant industries;

- Mobilize resources fro all economic sectors to develop the system of fertilizer production distribution towards regionally competitive products.

2. Targets of development

- Building a fertilizer production system with modern technologies and appropriate scale, and a safe and effective distribution system aiming to sufficiently supply fertilizers with high quality and reasonable prices serving the agricultural production, ensuring food security, and participating in export,. The nutrition content of NPK fertilizer and organic fertilizer must suit each kind of plants and land;

- The distribution system must be safe and reasonable, ensure the timely supply of fertilizers to farmers with reasonable prices. The domestic fertilizer market must be stable, without defective products, shortage of products, and false price rise.

3. Orientation of development

a) Orientation of developing the fertilizer production system

- General orientation: Utilizing the domestic resources such as coal, natural gases, and apatite ore to develop the production of nitrogenous fertilizer and phosphate fertilizer; cooperating with foreign partners in extracting, choosing, producing, and supplying potassium fertilizer;

- Orientation of developing nitrogenous fertilizer: Deploying and completing modern nitrogenous fertilizer factories to meet the demand for fertilizer for agricultural production towards export;

- Orientation of developing Diammonium Phosphate fertilizer (DAP fertilizer): Building or expanding DAP fertilizer factories to supply enough fertilizer that contain nitrogen and phosphate;

- Orientation of developing phosphate fertilizer (including superphosphate fertilizer and melted phosphate fertilizer: Not expanding nor increasing the productivity of current superphosphate fertilizer factories. Investing in producing products with higher P₂O₅ content. Taking all the compounds that contain fluorine during processing apatite to serve other industries. Not developing new projects of producing melted phosphate fertilizer. Investing in technological innovation and enhancing the quality of melted phosphate fertilizer;

- Orientation of developing sulfate ammonium fertilizer (SA) fertilizer: Depending on the output of projects of production and the collection of ammonia and sulfuric acid, investing in producing SA fertilizer;

- Orientation of developing NPK fertilizers: Organizing at NPK fertilizer factories, expand the production scale, applying advanced technologies, assuring product quality, removing NPK factories that employ manual methods, produce defective and inconsistent products;

- Orientation of micro-nutrient fertilizers: producing micro-nutrient fertilizer used for the base and spraying on leaves suitable for each kind of plants and oil;

- Orientation of developing organic fertilizer: Developing organic fertilizer factories by utilizing the existing peat resources, living wastes, and by-products from processing agricultural and aquatic products, ensuring environmental hygiene and safety.

b) Orientation of developing the fertilizer distribution system

- Concentrating on building and strengthening the distribution system of producing and trading establishments funded by the State, together with developing the retail system. Enhancing the role of local commercial cooperatives for supplying fertilizer to farmers with reasonable prices. Intensifying the control over prices and quality of fertilizer. Creating highly competitive brand names.

- Building more distribution centers to partially remove intermediate stages. A center must have a safe warehouse system, a professional managerial staff, and operate towards satisfying the demand for quantity and diversity of fertilizer for agricultural production, for good quality, reasonable prices, based on the discount of the factories and importers, so that other expenses may be covered.

4. Planning development

a) The fertilizer production system

- In-depth investment:

+ 2011 – 2015: Expand the production and use of nitrogen stabilizer urea,… to reduce the leak of nitrogen during the use; discard the manual method of NPK fertilizer production technology with low quality and high moisture; gradually increase the nutrient content in fertilizer; add more micronutrients that suit the plants and soil; develop leaf fertilizer that content macronutrients and micronutrients, growth stimulants that suit each kind of plants and soil; expand the products of organic fertilizer to approximately 500,000 tonnes per year using the existing resources such as peat, wastes from agricultural processing, and permissible microorganisms that ensure the environmental safety.

+ 2016 – 2020: Gradually convert from producing superphosphate to rich phosphate, which content approximately 28% P₂O₅; produce NPK fertilizer of which the nutrient content is higher than 30% by chemical method and granulation; sustain in-depth investment, mechanization, and the use of modern control system to reduce production cost and protect the environment.

- New investment

+ 2011 – 2015: Build a nitrogenous fertilizer factory that reaches 560,000 tonnes per year using coal dust, a factory of melted phosphate fertilizer that reaches 200,000 tonnes per year, and a ammonium sulfat factory that reaches 300,000 tonnes per year, apart from the works under construction such as the Project of renovating and expanding the nitrogenous fertilizer factory of Ha Bac, the nitrogenous fertilizer factory of Ninh Binh, nitrogenous fertilizer factory of Ca Mau, the DAP factory 2, and potassium fertilizer factories,  Complete and improve the quality of DAP fertilizer from the Dinh Vu DAP factory in Hai Phong, and invest in the project DAP 2 in Lao Cai, build a apatite filtration factory of class III that reaches 250,000 tonnes of fine ore per year, and a apatite filtration factory of class II that reaches 800,000 tonnes of fine ore per year.

+ 2016 – 2020: Expand the existing DAP factories or build an new DAP factory 3 that reaches 330,000 tonnes per year, build a sulfate ammonium factory that reaches 400,000 tonnes per year. Expand the potassium fertilizer factory up to 700,000 tonnes per year (depending on the actual reserves of the mine).

b) Planning of the fertilizer distribution system

- Planning principles:

+ Organize the fertilizer distribution system based on the supply – demand, and the orientation of the target market. Satisfy the demand for supply, quality, delivery time, and prices of farmers;

+ Develop a comprehensive fertilizer distribution system, facilitate the management and market intervention of the State when necessary;

+ Develop the fertilizer distribution system that brings the highest economic efficiency, so that the market shares of members are equitable, the activities are specialized, and the total circulation cost is lowest;

+ The fertilizer distribution system must establish and strengthen the comprehensive, sustainable relationship among its members, and the international integration, and create a healthy competition among the systems, including foreign-capitalized enterprises.

- The fertilizer distribution system must be operated through the market mechanism under the management of the State; reduce intermediate stages, and achieve high efficiency; ensure the supply of high-quality and reasonably-priced fertilizers to all areas.

- Plan for locating fertilizer distribution centers: the fertilizer distribution centers must be located considering  the following factors: the important agricultural production localities, the locations with high consumption of fertilizer, convenient transportation, easy for combining production and consumption.

- The scale of a distribution center depends on the demand for fertilizer in its are, the seasons, the reserve period, the transportation from the factories… Each distribution center may supply 300,000 – 350,000 tonnes of fertilizer per year (including the reserves for planting seasons).

- The warehouse system: the distribution system needs safe warehouses to avoid flood. The warehouse structure must suit the preservation, the natural conditions and climate of each area. The warehouse contain 30,000 – 35,000 tonnes of fertilizers. The warehouse area is 8,000 – 10,000m² (warehouses of private traders may be smaller).

- 2011 – 2015: Establish 14 regional distribution centers. The specific locations shall be decided by investors.

- 2016 – 2020: Expand or develop 8 new fertilizer distribution center. The specific locations shall be decided by investors after the distribution centers above are already established.

The quantity of distribution centers stated above is the orientation. It may change depending on the market demand, investment and trade liberalization.

5. Capital demand

a) The capital demand for the fertilizer production system 2010 – 2015 is approximately 28,900 billion VND; the capital demand for the fertilizer production system 2016 – 2020 is nearly 19,000 billion VND; the total capital demand for developing the production system of the entire planning is 49,000 billion VND.

b) The capital demand for the fertilizer distribution system 2011 – 2015: Establish 14 regional distribution centers. Average investment for each center is 30 billion VND. Therefore, the capital demand for the distribution system in this period is 420 billion VND. 2016 – 2020: establish 8 distribution centers, capital demand for this period is 240 billion VND. Therefore, the total capital demand for the distribution system in the entire planning is 660 billion VND.

The total capital demand for the fertilizer production and distribution system in the entire planning is 50,000 billion VND.

The list of projects of investment in the fertilizer production and distribution system is provided in Annex 1.

The capital demand for the fertilizer production and distribution system in each period is provided in Annex 2.

6. Primary solutions and policies

a) Solutions

- Solutions for capital

The capital is raised from various domestic sources, partly from the existing fertilizer producers and traders of, and the rest from domestic commercial banks, the Vietnam Development Bank, and foreign banks (if any).

- Solutions for ensuring resources

+ Solutions for the supply of natural gas and coal: The natural gas and coal for producing nitrogenous fertilizer shall by supplied by Vinacomin and PetroVietnam. Seek import when domestic supply is sufficient.

+ Solutions for ensure the sources of apatite and potassium rock salt: apatite ore shall be supplied by Vietnam Apatite Limited Company so as to meet the demand of producing superphosphate fertilizer, melted phosphate fertilizer, and DAP fertilizer. The supply of potassium rock salt: The project of exploring the reserve and quality of rock salt that contain potassium is being executed towards building a factory that reaches 500,000 tonnes of KCl per year.

+ Solutions for the supply of sulphur: the sulphur for producing superphosphate and DAP fertilizer has to be imported. In the future, the total sulphur supplied by oil refineries may reach 580,000 tonnes per year. The remaining sulphur for producing fertilizer still has to be imported.

+ Solutions for the supply of ammonia: during 2011 – 2015 , the ammonia for producing DAP, SA, and other purposes, has to be imported. The import of ammonia will reduce when the projects of producing ammonia are executed.

The demand for materials is provided in Annex 3.

- Solutions for investment

The technological copyright and primary devices of the projects of investment in large constructions, such as factories that produce nitrogenous fertilizer, DAP, potassium fertilizer, and extracted phosphoric acid, shall be purchased. The production of ancillary equipment shall be facilitated.

- Solutions for the fertilizer market

+ The major enterprises that produce and trade fertilizers, especially State-owned enterprises, shall cooperate in establishing regional distribution centers nationwide, concentrating on key localities, in order to establish an official distribution system and create reputable brand names. Develop the electronic commerce on the domestic fertilizer market. Seek foreign market for exporting domestic fertilizer, avoid the abundancy when the urea factories run at full capacity

+ Enhance the State management of the distribution network, control the prices and quality of fertilizer. Detect and penalize the production and trade of fake or low-quality products. Intensify the dissemination of knowledge about the market and the use of fertilizer to distributors and farmers.

- Solutions for environment protection

+ During the production of fertilizer: the fertilizer factories must monitor the environment according to the standards and the frequency stipulated in the approved Report on the impact on the environment, and comply with provisions on environment protection.

+ During the transport, preservation, and use of fertilizer: fertilizer must be preserved in moistureless warehouse with sturdy roof to survive flooding. The transit warehouse must have fork-lifts or a conveyor belt system. The farmers must be provided with knowledge about using fertilizer in order to avoid wasting fertilizer and raise the use efficiency of fertilizer and land.

- Solutions for developing the human resources

+ Regarding the production: Keep on training and raising the proficiency of workers participating in the production of fertilizer, especially workers in new factories;

+ Regarding the distribution: Raising the proficiency of officers, enhance the use of electronic commerce services.

- Solutions for developing potential science and technology

+ The researches serving in-depth investment includes: research on technological innovation aiming to lower the cost of material and energy, raise the productivity, and resolve the issues arising during the actual production; research on the reasonable use of natural resources in the production of fertilizer, research on producing the substitutes for imports.

+ The research on development: research on producing new fertilizers with better effects aiming to optimize the supply of nutrients according to the demand of plats, to save fertilizer, and contribute in environment protection due to the reduction of nutrient leakage, to raise the effect of nutrients and the productivity; research on technology of producing fertilizer that contain phosphate from apatite ore of class II; build a fertilizer research program, participated by many levels, from the Central to the factories.

b) Policies

- Enhance the competence of State management: implement the Decree No. 113/2003/NĐ-CP Decree No. 191/2007/NĐ-CP and Decree No. 15/2010/NĐ-CP of the Government on the management of fertilizer production and trading; assign managers and allocate budget for the central fertilizer management; adopt reasonable regime for commendation and penalty;

- The policies on developing socio-economic infrastructure: prioritize the development of traffic system to remote areas; encourage all economic sectors to participate in developing the traffic to villages;

- Policies on supporting the production and distribution of fertilizer:

+ Preferential capital loan during the investment in the production and the warehouse system at fertilizer distribution centers; during the production of fertilizer for overlapping crop and fertilizer reserves;

+ Encourage all economic sectors to participate in establishing regional fertilizer distribution centers and, especially services cooperatives;

+ The local authorities must organize the warehouse complexes of fertilizer, rice, fuel, etc. in important agricultural production areas to guide the investors;

+ The Vietnam Fertilizer Association must connect fertilizer producers and suppliers, forecast the demand for fertilizer in each period, and their prices in each area to guide the market;

+ Enhance the market communication, train managers of all stages, especially the end-distribution.

Article 2. Implementation organization

1. The Minister Of Industry And Trade shall:

a) Perform the State management of fertilizer industry; be in charge of monitoring, inspecting, and announcing the plans, technical standards, and conditions for investing in projects of inorganic fertilizer production;

b) Inspect and give written opinion about the ability to fulfill the compulsory conditions of the project of investments under the Prime Minister’s authority to approve;

c) Periodically report the implementation and adjustment of the planning, ensuring the suitability for the national socio-economic development and the progress of international integration;

d) Be in charge and cooperate with Ministries, sectors and localities in resolving the difficulties of the projects of producing inorganic fertilizer; perform the tasks assigned by the Prime Minister in the Decree No. 113/2003/NĐ-CP and the Decree No. 191/2007/NĐ-CP of the Government on the management of fertilizer production and trading, and relevant Decree and Decisions;

dd) Propose mechanisms and policies for sustainably developing the fertilizer industry;

e) Monitor the demand and supply of the domestic fertilizer market; propose mechanisms and policies for facilitating the stable development of the fertilizer distribution system, and concurrently improve the management of fertilizer quality and prices, avoiding unreasonable fertilizer price rise. Control the fertilizer retail prices on the market in accordance with the current provisions. Prevent counterfeit and faulty products. Send reports to the Prime Minister for taking measure for stabilizing the market;

g) Cooperate with Ministries, sectors and localities in enhancing the role of collective economy in the sale of agricultural products and supply of agricultural materials, as a foundation for building fertilizer retail channels in which the local trading and agricultural cooperatives are the core.

2. The Ministry of Agriculture and Rural development, the Ministry of Natural Resources and Environment, the Ministry of Science and Technology, the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Transport, the State bank of Vietnam, and the Vietnam Development Bank shall cooperate with the Ministry of Industry and Trade in implementing the solutions and policies stated in this Planning.

3. People’s Committees of central-affiliated cities and provinces shall manage and facility the execution of the local projects of investment in the production and fertilizer distribution system in accordance with the approved planning; Direct functional agencies to tightly manage the issuance of Certificate of business registration to fertilizer business, ensure the conformity with law. The local market management forces must cooperate with the police and tax authority in enhancing the inspection and control of fertilizer market and prices, prevent the speculation and forgery, ensure the local fertilizer price stability.

4. The Vietnam Fertilizer Association: Connect the enterprises that produce and trade fertilizer, balance the benefits of its members and farmers; cooperate with the Ministry of Industry and Trade, the Ministry of Agriculture and Rural development, relevant Ministries and sectors in the management of production, trading, and fertilizer price stabilization; participate in suggesting the mechanisms and policies for developing and managing the fertilizer industry.

Article 3. This Decision takes effect on the date of its signing.

Article 4. Ministries, ministerial-level agencies, Governmental agencies, People’s Committees of central-affiliated cities and provinces, and relevant agencies are responsible for implementing this Decision./.

ANNEX 1

LIST OF PROJECTS OF INVESTMENT
(Enclosed with the Decision No. 6868/QĐ-BCT dated December 27, 2010 of the Ministry of Industry and Trade)

ANNEX 2

CAPITAL DEMAND
(Enclosed with the Decision No. 6868/QĐ-BCT dated December 27, 2010 of the Ministry of Industry and Trade)

* If the potassium fertilizer factory is not opened, the total capital demand is 37,455 billion VND.

ANNEX 3

MATERIAL DEMAND
(Enclosed with the Decision No. 6868/QĐ-BCT dated December 27, 2010 of the Ministry of Industry and Trade)

Unit: thousand tonnes per year