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EVN asked to stop non-electricity investments   2008-07-15 - VNE, Lao dong

Deputy Prime Minister Hoang Trung Hai has asked the Electricity of Vietnam (EVN) to stop investments in non-electricity projects to focus on its forte. However, EVN argues that its outward investments are not problematic.


Hai has asked EVN to define priority orders for power projects which will be put into operation between now and 2010. EVN has to inform commercial banks about its monthly disbursement plans so that banks can take initiative in arranging capital to serve the projects’ execution. EVN also has to conduct negotiations with commercial banks to sign credit contracts on funding Son La, Huoi Quang, Ban Chat and expanded Uong Bi II projects.


Hai has asked EVN to stop injecting money in non-electricity projects to focus on power plant projects, in order to ease the capital pressure on commercial banks.


The government has recently asked economic groups to focus on their main business fields and not run after profit by making outward investments. The request was made as a lot of economic groups, including EVN, have injected money in many non-forte business fields that are thought to be very risky.


EVN’s General Director Pham Le Thanh on July 14, when talking to Lao Dong newspaper, said that the projects which have been operating will be kept in operation; EVN does not have the intention of withdrawing capital from the projects. As for the plan on setting up EVN Finance Company, EVN will report to the Prime Minister about the project as per request of the minister.


Thanh said that EVN’s outward investments account for 3.54% of the stockholder equity of VND50tril – within its control. EVN has made capital contributions to An Binh Bank, An Binh Securities Company and Ha Thanh Securities Company.


Thanh said that in order to gather capital for urgent power projects, EVN has checked current investment projects and decided to delay 500 construction items with the investment capital of VND1,802bil. In order to get medium- and long-term capital, EVN is considering selling EVN’s stakes in joint-stock companies through direct negotiations. As for new power projects, EVN will establish joint-stock companies to execute the projects, in which EVN’s capital will account for less than 30%.


Thanh said that after the meeting chaired by Deputy Prime Minister Hoang Trung Hai on July 3, EVN leaders worked with four commercial banks on arranging capital for half-finished projects. EVN will have to accept new lending interest rates of up to 21% per annum.


Thanh said that with the new lending interest rates, no EVN project will be economically effective. However, it remains unclear how much EVN can borrow from commercial banks, while it needs VND11,856bil.


“We still do not know how much exactly banks will give, but we have got the promise to get 50-70% of the sum,” Thanh said.


As for the $400mil loan from the Bank for Investment and Development of Vietnam (BIDV) to make payments for equipment for Son La Hydropower Project as ordered by the Prime Minister, EVN has not received an official notice from the Ministry of Finance.

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