A PetroVietnam pump outside Ho Chi Minh City. PVN chairman Phung Dinh Thuc has denied allegations that the group made losses by investing in non-core areas. Photo: Bloomberg
The state-owned Vietnam Oil and Gas Group (PetroVietnam or PVN) has not made any loss in its business activities, but has made ineffective investments in some areas, PVN chairman Phung Dinh Thuc said at a press conference Monday.
PVN held the press briefing after the Government Inspectorate released its conclusions about the group losing VND18 trillion (US$863 million) in the use of capital and assets and the management of investment and construction between 2006 and 2010.
Inspectors said the state-owned group had been found making investments in non-core businesses like finance, insurance, real estate and banking that proved less profitable than its main business.
They have proposed that Prime Minister Nguyen Tan Dung instruct relevant agencies to retrieve more than VND1.6 trillion (US$76.7 million) that PVN paid in advance to other companies for investment. They said some of the recipients had made no plans to return the money and others had not been able to make repayments.
The inspectors have also proposed that relevant agencies affix responsibility and punish those involved in other wrongdoings involving more than VND18 trillion, including VND2 trillion from equitization of its affiliates.
Prime Minister Dung has agreed with their proposals on dealing with PVN wrongdoings. He has instructed PVN to review its investments in non-core businesses and make proposals on solving its financial problems.
Thuc, the PVN chairman, told reporters that PVN, which was built into multi-sector group, had made "great contributions" to the national economy over the last years. Since 2009, when the economic conditions worsened, the company gained little profit, but did not cause any loss, he said.
According to the Government Inspectorate, PVN earmarked more than VND15.6 trillion ($748 million) earned from selling oil and gas for financial activities that are not listed in key oil and gas investment projects.
Thuc argued that the government had not yet issued any criteria for key oil and gas projects at that time.
The inspectors had also said that PVN had allocated VND622 billion ($29.8 million) to Soc Trang, Ha Tinh, Quang Binh, and Hau Giang provinces to complete site clearance for its projects without approval from Prime Minister Nguyen Tan Dung.
Thuc admitted the allocation was wrong but said the group was only looking to accelerate the projects rather than waiting for local authorities to compensate relocated residents in the sites where the projects were to be implemented.
He said PVN will finish revocation of capital from non-core projects by 2015 as instructed by the government.
At the press briefing, Thuc did not mention the responsibility of Transport Minister Dinh La Thang for his role at the helm of PVN.
Thang, who has not hesitated to propose and take controversial measures since he took office last July, was chairman of PVN between October 2006 and August 2011.
In a statement after being appointed as Transport Minister, Thang vowed to improve traffic infrastructure and reduce traffic accidents and gridlock as his main initiatives.
Amid a slew of measures proposed by Thang that subsequently came under harsh criticism, and enthusiastic support, were high vehicle fees to limit the use of personal cars, and a regulation banning transport officials from playing golf.
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