Many state giants post huge losses

The case of Agribank financial leasing company 2 (ALCII) with heavy losses of trillions of dong has discovered, which has given many people big shocks. Within the past one year many heavy loss-making state corporations have been detected.

Ending the audit of 2009 financial statements of Agribank, the State Auditor of Vietnam also discovered a series of violations by this bank. Of which, only a financial leasing subsidiary of Agribank so-called ALCII posted losses to three trillion dong in 2009. This company is also venerable of potential losses for the amount of invested rental properties worth nearly 4.6 trillion dong overdue, to be extended for several times (including the State Auditor of Vietnam temporarily voiced its potential losses up to 1.266 trillion dong).

In the capital-raising activities, ALCII has violated the provisions of short-term deposits. In the two years of 2008 – 2009, ALCII signed six deposit contracts for 12 months with the amount of above 510 billion dong to meet liquidity for the commitments of investment and the leasing of the company.
Besides, ALCII did not pay interest to customers on contractual agreements, causing damages of over 1.1 billion dong. The company mobilised funds for more than 26 contracts worth 1.3 trillion dong with interest rates of above 17.5 percent a year, exceeding the ceiling rate prescribed by Agribank.

In fact, ALCII had posted losses for many years prior to 2007 and had been discovered, however, the parent company Agribank stood out to guarantee and continued to make capital injections for this unit.

EVN heavy losses and accumulating debts

Recently, on the proposal to increase electricity prices, EVN is continuing to talk about its heavy loss and gave the reason that the selling price is lower than market prices. In fact, EVN talked its losses for several years. Earlier, in 2010, EVN officially declared the group suffered a loss of more than 8 trillion dong. This made the public opinion extremely concerned because at present, EVN is a state monopoly electricity provider in Vietnam market, there is not any other competitors, the loss in its business activities cannot hardly be accepted.

Earlier April 2011, Vietnam Oil and Gas Group (PVN) announced that EVN still owed about 5 trillion dong debt with PetroVietnam. This debt was mainly due to EVN’s buying electricity from PetroVietnam Electricity Corporation and has not been paid yet. Moreover, recently, the Vietnam Coal – Minerals Group (Vinacomin) has announced that the EVN still owed money for purchase of its electricity and coal. By March 31, EVN owed Vinacomin more than 1.6 trillion dong. Thus, EVN not only has posted heavy losses but also pile up more debts.

Then a few days ago, the FPT Corporation decided to withdraw plans to invest in EVN Telecom with the aim initially to acquire 60 percent stake in the subsidiary of EVN. However, the government approved to only allow EVN to sell 49 percent stake to FPT, which has once again pushed EVN to deeply into the deadlock. Because earlier, this group hoped that with an investment capital of FPT, EVN would revive its telecommunications company that is suffering multiple losses.
Even 12 percent deposit (equivalent to over 700 billion dong), experts and insiders have said that FPT will recover soon because many terms of the contract have changed.

Every day Petrolimex lost more than 7 trillion dong
While EVN is posting losses in the consecutive years from 2010 to now, the business investment situation of Petrolimex in the first few months in 2011 has been not better. From mid-February, during a meeting between the government with state corporations, CEO of Petrolimex, Bui Ngoc Bao announced, with the price of gasoline sold in the market at that time compared with import prices (as of February), the Petrolimex suffered losses every day worth more than 7 trillion dong.

Summarising its business activities in the first quarter 2011, Petrolimex said that lost a total of 2.650 trillion dong from selling oil and petroleum.

The causes of losses at state corporations are blamed for ineffective investment, project management, liabilities, cash flow… with many shortcomings and weaknesses. But experts and many people would argue, this is not just a matter of poor management, limited skills, but also the variations of the currency of the State untransparently.

In addition, many state-owned companies or their subsidiaries have also plunged into heavy losses. According to the State Audit’s figures published late in 201o, the audit results of 183/242 independent accounting enterprises of 20 state corporations showed that only 88 percent (161/183) made profits. Total before tax profit of 20 state corporations reached more than 16.6 trillion dong.

The state corporations posted huge losses such Vietnam general Engineering Construction Company accumulated losses 39 billion as of December 31, 2008, Cienco 6 posted an accumulated loss of nearly 149 billion dong, Vinacafe reported profit of 199 billion dong but lost 525 billion accumulated loss after the audit.

Additionally, at that time, the State Audit also detected many corporations have bad debts as Vietnam Southern Food with bad debt of 56 billion dong, Hanoi Construction Company 51.2 billion dong, Viettel Trading and Export Company (Viettel) with bad debts of 79 billion dong and others. – Dat Viet

Tags: Vietnam companies, Vietnam enterprises, Vietnam SOEs