The
Prime Minister has dismissed Dao Van Hung, chairman of the Electricity Group of
Vietnam (EVN), which has been making losses while under his control, with the
loss-stricken EVN Telecom the most infamous example.
Besides EVN Telecom, which was forced to
accept acquisition by the military-run Viettel Group to avoid insolvency, EVN
also incurred enormous losses from other investments in non-core businesses,
said Vu Duc Dam, head of the Government Office.
By the end of 2010, EVN sank a total of
VND2.44 trillion ($117.1 million) in investments into EVN Telecom, while also
covering expenses of more than VND1 trillion to supply terminal devices for the
telecom operation.
During the initial stages of entering the
telecom industry, EVN received warnings from industry insiders that telecom is
a non-core sector to the power enterprise. However, EVN executives claimed that
it could make use of the already existing infrastructure of power poles and
wires for telecom development.
Moreover, they said, with the advanced 3G
technology, EVN Telecom would be able to compete successfully against other
rivals in the industry.
However, since EVN Telecom could not afford to
offer promotional campaigns to attract subscribers like its Viettel, Vinaphone
and MobiFone rivals, it soon drowned, unable to withstand the competition of
the industry.
With the number of subscribers dramatically
slumping, EVN officially declared the failure of EVN Telecom at the end of
2010, when Hung admitted that the telecom had been incurring a monthly loss of
dozens of billions of dong.
Haphazard
investment
Under Hung’s regime, EVN has sunk thousands of
billions of dong in investments in many other non-core sectors such as
securities, banking, and real estate, while the power industry faced a capital
shortage for power production.
By the end of 2010, EVN’s total non-core
investment topped VND50 trillion ($2.4 billion), nearly 90 per cent of which
was accounted for by EVN’s affiliates and subsidiaries.
However, such a huge investment would only
yield profits worth a mere VND540 billion, or a return-on-equity ratio of only
1 per cent.
EVN also had a total investment of VND2.1
trillion in four other “sensitive” sectors, including real estate, insurance,
banking, and finance, accounting for 3.27 per cent of its equity.
According to audit results of EVN in 2010, the
state-run enterprise suffered a total loss of VND8.41 trillion, while the
figure in 2011 was nearly VND17 trillion.
Last October, the Government Office ordered
that the Ministry of Finance and the Ministry of Industry and Trade conduct
check-ups of EVN’s power pricing scheme, and its investment in the non-core
businesses, especially the securities, banking and insurance sectors.
The Ministry of Industry and Trade should
order EVN to provide discipline and other sanctions on relevant agencies and
individuals, the Prime Minister ordered.
Tuoi Tre |
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