PetroVietnam cracking down on losses

PetroVietnam has decided to form teams to handle its loss-making projects since the snail-pace progress of the process has displeased the Government - Photo: vneconomy.vn

The decision was announced at a recent 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 leaders for further steps.

The move came just a few days after Deputy Prime Minister Vuong Dinh Hue openly criticised PetroVietnam 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 PetroVietnam.

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 PetroVietnam to work with its partners to restart the Dung Quat ethanol biofuel project in the central province of Quang Ngai and the Dinh Vu yarn plant in the northern city of Hai Phong, then offload the State capital in the two projects. For the Binh Phuoc ethanol biofuel project, the MoIT asked PetroVietnam 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 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 guidance 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 needed 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, the companies should switch to Plan B of selling the projects to other investors,” he said.