Vietnam: PVN cracking down on losses

Vietnam: PVN cracking down on losses

The Viet Nam National Oil and Gas Group (PetroVietnam) has decided to form
teams to handle its loss-making projects since the snail-pace progress of
the process has displeased the Government.

The decision was announced on Friday at a meeting between the corporation's
heads and representatives of the Ministry of Industry and Trade (MoIT).

The taskforce teams will be responsible for drawing up concrete plans to
handle each project, which include detailed roadmaps, needed mechanisms and
policies, and submit them to the corporation's heads for further steps.

The move came just a few days after Deputy Prime Minister Vuong Dinh Hue
openly criticised PVN for the ineffective handling of unprofitable projects
at a meeting with the MoIT and some State-owned enterprises to seek measures
for dealing with 12 loss-making projects, five of them at PVN.

They include three biofuel factories in Phu Tho, Quang Ngai and Binh Phuoc
provinces, the PVTex Dinh Vu Yarn Plant and Dung Quat ship-building plant.

Of the five projects, the MoIT decided to declare bankruptcy for the Phu Tho
Ethanol Biofuel Plant and Dung Quat Ship Building Industry Company.

The MoIT asked PVN to work with its partners to restart the Dung Quat
ethanol biofuel project in Quang Ngai Province and the Dinh Vu yarn plant in
Hai Phong, then offload the State capital in the two projects.

For the Binh Phuoc ethanol biofuel project, the MoIT asked PVN to work with
foreign investors to resume the project because it is involved in the
replacement of RON92 petrol with E5 biofuel starting January 1, 2018.

At the Friday meeting, PetroVietnam General Director Nguyen Vu Truong Son
admitted that the handling of these projects yielded no progress over the
past year. "All activities just stopped at holding debates and discussion.
Almost no work has been implemented," he said. He attributed the problem to
hurdles in financial mechanisms, particularly the shortage of money.

For example, restarting the Dinh Vu plant required a big sum of money, which
the company could not secure. The finalisation of Engineering, Procurement
and Construction (EPC) agreements for the biofuel factories in Phu Tho and
Quang Ngai also required additional bank loans, and this required guidances
from MoIT and the Government, he said.

PetroVietnam Deputy Director General Nguyen Huu Dung said the corporation
had prepared various plans, such as asset auctioning and divestment, but was
unable to implement them because it did not get funds from the State.

Deputy Minister of Industry and Trade Hoang Quoc Vuong, however, reaffirmed
that the Government was resolute about not spending more money on these
projects. He told the companies in charge of the projects to carry out
measures like establishing financial reserve funds, filing for bankruptcy or
selling projects to other investors to raise the neded money.

"But top priority should be given to restarting the projects before
divestment. So those which are joint stock companies must call shareholders'
meeting to finalise solutions for capital increase and report to the
Government before July 15. In case the Government does not approve the
capital increase solutions, then the companies should switch to Plan B of
selling the projects to other investors," he said.

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Link to Original Article:
http://www.vir.com.vn/pvn-cracking-down-on-losses.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com