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Giant EVN trying to negotiate for a delay to pay its debts
After PetroVietnam, the oil and gas group, and Vinacomin, the coal producer and supplier, released the information about the sums of money the Electricity of Vietnam (EVN) are owing to them, EVN has admitted to big debts, but said it still cannot pay the debts right now.
According to PetroVietnam and Vinacomin, the total sum of money EVN is owing to them is about 6600 billion dong. Meanwhile, recently, Hiep Phuoc Power Company, one of the electricity suppliers to EVN, has threatened to stop providing electricity, if EVN does not pay the debt of 36 million dollars, or 756 billion dong.
Dinh Quang Tri, Deputy General Director of EVN, admitted that the group is burdened with huge debts. He said, debts in oil, gas, coal and electricity purchasing contracts has totaled up to 8 trillion dong. Meanwhile, EVN incurred a loss of 8 trillion dong in 2010. The electricity retail price increase has only been applied since April 1, therefore, it cannot pay debts right now.
Tri said on Tien phong, that EVN has reached a consensus with Vinacomin and PetroVietnam that EVN will prioritize paying debts in the electricity purchasing contracts signed with foreign invested enterprises, such as BOT Phu My 2 and Phu My 3. EVN will also prioritize paying debts in the contracts on purchasing fuels to run power plants. As for other debts, EVN will pay later, with interests.
“We are in such circumstances and I think other enterprises should agree with our plan. If we had money, we would pay immediately,” Tri said.
However, VnExpress quoted a manager of Vinacomin as saying that to date, “EVN and Vinacomin still have not agreed on any plan to settle the debts.”
The manager said that though EVN is a big debtor, Vinacomin still has to continue providing coal and electricity to EVN. According to his calculation, with the old electricity pricing mechanism, EVN will surely incur losses. However, the electricity price has increased by 15.28 percent since March; therefore, no one can say that EVN would still be facing difficulties.
The manager has stressed that EVN has to pay the debts in 2011. “EVN needs to pay debts this year, because we are facing big difficulties ourselves. In order to ensure normal operation, the subsidiaries, which lent to EVN, now have to borrow money from banks and pay interest rates monthly,” he said.
Tri from EVN complained that people do not have good understanding about electricity production. The Hiep Phuoc Power Company, a foreign run power enterprise, threatened to cut power immediately if it incurs losses. However, EVN, as a state owned economic group, which has the responsibility of providing enough power to the national economy, does not act like Hiep Phuoc. EVN still has to provide power even when it incurs losses.
“Last year, we had to run some power plants with oil in order to reduce the power cuts,” he said.
He went on to say that EVN wants to speed up the process of marketing the electricity prices, and that EVN does not want to hold power generation corporations (GENCO) any more. EVN has sent a document to the Prime Minister, asking for the permission to split GENCOs from EVN, so that EVN will only have one function of buying electricity from GENCOs to distribute.
However, it is clear that it is impossible to split GENCOs from EVN right now, because power companies can only borrow capital when they still belong to EVN and use EVN brand.
Therefore, a roadmap on splitting GENCOs from EVN has been suggested, under which GENCOs will still belong to EVN for three years and will gradually operate independently from EVN.
In reply to the criticism that EVN has been using too much money to make investments in non-power sectors, such as banking, real estate and telecom, Tri argued that the total investment capital of EVN in other business fields is just about three percent of EVN’s total capital, or three trillion dong. Meanwhile, a government’s decree stipulates that enterprises are allowed to make investment in other business fields with the capital of up to 30 percent of capital.
Minister of Industry and Trade, Vu Huy Hoang, on April 19 instructed EVN to prioritize paying debts to Hiep Phuoc Company as promised. Besides, the agencies and departments need to soon organize a meeting where leaders of the Ministry of Finance and MOIT will chair and listen to the financial reports of the enterprises.
vietnamnet
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