EVN Requested to Divest Outside-the-sector Business

Regarding the VND121 trillion outside-the-sector investments of EVN, Minister Vu Huy Hoang affirmed that the investment of power sector into member companies had been investment in power projects and therefore, it could not be considered outside the sector. According to the decision of the Prime Minister, by 2015, the power sector would have finished divesting all VND2 trillion invested in banking and insurance.

 

The Minister said that in 2013, the Government Inspectorate had conducted a comprehensive inspection of business and production activities of EVN up to the year of 2011. According to the Government Inspectorate’s report to the Prime Minister, before the reorganisation and restructuring, EVN hadn’t operated in parent – subsidiary form. In fact, out of VND121 trillion, there’s only about VND2 trillion was really outside-the-sector investment in banking and insurance, most of the rest was loans EVN made at that time to invest in electrical projects, including power plants, grid lines systems and transmission stations in subsidiaries. After restructuring as an economic group, those loans from banking institutions, especially foreign banks, were still considered the parent company’s. Foreign banks did not allow the parent company EVN to transfer repay duty to its member companies.

 

In response to delegates’ question concerning the information of the electricity sector built luxury villas with pools and tennis courts as part of power projects and accounted the cost into electricity bills in 2011, Minister Vu Huy Hoang quoted inspection results of the Government Inspectorate saying that there were six projects relating to this information, including the thermal power plants of O Mon 1, Nghi Son 1, Phu My, Quang Ninh 1 and Hai Phong. Of those six projects, only the O Mon 1 Thermal Power Plant had a pool, but not tennis courts. Some others had villas but that’s only for the purpose of attending to foreign experts during construction and technology transfer. The Minister also clarified that most of those facilities were located remotely from urban areas as well as economic centres. Therefore, they were built only to attend to foreign experts’ needs but were kept at an appropriate extent. Moreover, this kind of construction was not seen in the power sector alone. Other projects borrowing or using foreign capital also often had servicing facilities for experts. When construction or warranty time ended and foreign experts returned to their countries, those facilities would be used to provide services for officers and employees working in the industry. “It’s a hard task trying to attract and persuade people to come to work in remote sites of hazardous environments. Therefore, I think public would agree that creating favourable conditions for staff and employees by constructing welfare infrastructure is totally reasonable,” said the Minister.

 

Currently, out of these six projects, only Phu My 1 Thermal Power was accounted into electricity cost because it was built a long time ago, but the amount was of very small percentage, from VND1.5 - 3 billion each year on total revenues of VND6 trillion. The five remaining projects were not accounted in cost of electricity. This was the official conclusions reported to the Prime Minister and given approval.

 

“I can affirm you that the story of these six projects including cost of luxury facilities construction into the prices of electricity in 2011 is definitely untrue, except for the O Mon 1 Thermal Power Plant which was built about ten years ago, but the rate included in the price was also very small,” said Minister Vu Huy Hoang.