Thread Content
The general contracting contract for Donghua Technology’s coal-to-ethylene glycol project in Inner Mongolia has been put up for auction! Author/Source: Nenghua Dynamics Date: 2021-11-27 Clicks: 35 Investment of 6 billion yuan! The coal-based ethylene glycol project in Inner Mongolia, which had been on hold for many years, is now seeing progress. Recently, Zhalute Banner held meetings with China Hydrogen Energy Co., Ltd., Three Gorges Clean Energy Co., Ltd., and Cornell Group to have in-depth discussions on advancing the construction of this project. At the meeting, the investment delegation provided an overview of the company’s development and explained the importance of developing the hydrogen energy industry in addressing the issue of renewable energy reuse. It was also stated that Zhalut Banner boasts abundant energy resources, well-developed transportation infrastructure, and a complete range of supporting industries; it has an advantage as a latecomer in the development of clean energy, making it an ideal platform for such projects. Next, in-depth discussions will be held on specific project cooperation plans, with the aim of making substantive progress in the bilateral cooperation as soon as possible, thereby helping Zhalute Banner to reach new heights in its high-quality development. The Fude Cornell Phase I project, with an annual production capacity of 300,000 tons of ethylene glycol, is located in the Lubei Industrial Park in Zhalute Banner, Inner Mongolia. It involves an investment of 5.88 billion yuan and has an annual output of 300,000 tons of ethylene glycol. The project is EPC-general contracted by Donghua Engineering Technology Co., Ltd. The ethylene glycol production process utilizes a high-chemical synthesis gas method, while the gasification technology employs the Corin dry powder gasification process. It is reported that the 300,000 tons per year ethylene glycol project has obtained all the necessary approval documents, including those related to environmental impact assessment, safety evaluation, water resource assessment, soil and water conservation, occupational health, energy efficiency evaluation, and planning permits; thus, the construction of this project complies with relevant laws and regulations. On May 20, 2013, the on-site civil work commenced, and actual construction began in April 2014; the full-line commissioning was originally scheduled for September 2016. 4.6 billion yuan has been invested in this project, with an overall progress rate of 76% on site; Phase 2 of this project includes a production capacity of 600,000 tons of ethylene glycol. Due to funding issues, work has not resumed since November 2016. In 2018, it was involved in a dispute over contract payments amounting to 3.6 billion yuan. Inner Mongolia Cornell Chemical Industry Co., Ltd. was established on November 12, 2010, and faced a dispute over contract payments of 3.6 billion yuan in 2018. In March 2014, Donghua Technology signed an EPC/turnkey project general contract for the 300,000 tons per year coal-based ethylene glycol project of Inner Mongolia Cornell Chemical Industry Co., Ltd. with Cornell Chemical Industry Co., Ltd. In April 2014, Donghua Technology, together with Cornell Chemical Industry Co., Ltd. and Inner Mongolia Cornell, signed a tripartite agreement regarding the change in the party responsible for the EPC/turnkey project contract for Cornell Chemical Industry Co., Ltd.’s 300,000 tons per year coal-based ethylene glycol production project. Under this agreement, Inner Mongolia Cornell replaced Cornell Chemical Industry Co., Ltd. as the contractor for this project, assuming the rights, obligations, and responsibilities stipulated in the existing contract. In June 2014, Donghua Technology and Inner Mongolia Cornell signed a Supplementary Agreement to the EPC/Turnkey Project General Contract for Inner Mongolia Cornell’s 300,000 tons per year coal-based ethylene glycol project. In June 2015, Donghua Technology and Inner Mongolia Cornell signed the \"Supplementary Agreement (Continuation) to the EPC/Turnkey Project General Contract for Inner Mongolia Cornell’s 300,000 tons per year coal-based ethylene glycol project\", adjusting the contract price to 3.69628 billion yuan. It is reported that once the aforementioned contract and supplementary agreements come into effect, Donghua Technology will carry out various tasks in accordance with the schedule specified in the contract, advancing the construction of the project steadily as planned. However, since October 30, 2014, this project has been operating abnormally due to funding issues at Inner Mongolia Cornell. Donghua Technology continued with the project construction until the end of December 2016. As of the end of August 2016, Inner Mongolia Cornell had approved a total of 2,671,504,300 yuan in payments for project progress; an actual amount of 2,111,197,400 yuan had been paid, with 560,306,900 yuan still outstanding. On May 8, 2017, the Higher People’s Court of Inner Mongolia officially accepted the case for handling. Donghua Engineering Technology Co., Ltd. filed a civil lawsuit with the Inner Mongolia High People’s Court regarding the overdue payment for the project progress related to the EPC/turnkey project for the 300,000 tons per year coal-based ethylene glycol production facility built by Donghua Technology for Inner Mongolia Cornell Chemical Industry Co., Ltd. In May 2018, Donghua Engineering Technology Co., Ltd. issued a announcement stating that it received from the Higher People’s Court of Inner Mongolia Autonomous Region, on May 22, 2018, the \"Civil Judgment\" No. (2017) Nei Min Chu 42 regarding the lawsuit between Donghua Technology and Inner Mongolia Cornell Chemical Industry Co., Ltd. The specific judgment is as follows: Inner Mongolia Cornell shall, within ten days from the effective date of this judgment, pay Donghua Technology the amount of 505,549,400 yuan as payment for the progress of the project, as well as interest of 32,431,579 yuan accrued up to February 28, 2017. It shall also pay interest starting from March 1, 2017, until the actual date of payment (calculated at the interest rate applicable to similar loans by the People’s Bank of China for the same period) ； Within ten days after this judgment takes effect, Donghua Technology shall issue a bank performance guarantee in the amount of 369.62813 million yuan to Inner Mongolia Cornell, with the validity period lasting until 6 months after the successful trial operation by both parties ； Within ten days after this judgment takes effect, Donghua Technology shall address the quality issues raised by Inner Mongolia Cornell and make the necessary corrections until the products pass the inspection. Inner Mongolia Cornell was dissatisfied with the judgment rendered in the first instance by the Inner Mongolia High Court, and appealed to the Supreme People’s Court. On October 16, 2018, the Supreme People’s Court ruled to dismiss the appeal and uphold the original judgment. Last year, the project was put up for auction, with a starting bid of 1.9 billion. In March 2019, Donghua Engineering Technology Co., Ltd. applied to the Tongliao Intermediate People’s Court to order the comprehensive seizure, assessment, auction, and sale of the existing assets related to the 300,000 tons per year coal-based ethylene glycol production project, and requested that the court appoint qualified assessment and appraisal agencies as well as auction support organizations to handle these matters. From 10:00 on November 4, 2020, to 10:00 on January 3, 2021 (excluding any extensions), the Tongliao Intermediate People’s Court held a public auction on its Ali Auction platform. The items up for auction were the assets of the 300,000 tons per year coal-based ethylene glycol production project, excluding current assets. The starting bid price for the asset is 1,922,880,000 yuan, while its appraisal value is 2,827,760,694 yuan. A deposit of 384,576,000 yuan is required to participate in the bidding, and the increase in bid amount per round is 9,614,400 yuan. The subject matter consists of all the production facilities and auxiliary systems for Inner Mongolia Cornell Chemical Industry Co., Ltd.’s 300,000 tons per year ethylene glycol production project. Specifically including: fixed assets – buildings and structures, equipment and construction materials, electronic equipment, and vehicles ； Under construction: railway lines, buildings, structures and other auxiliary facilities, machinery and equipment, electrical equipment and instruments ； Intangible assets: land and other intangible assets. According to the Alibaba Auction platform, this auction is the third attempt to sell the item, following two previous failures to find a buyer.