Prime Minister Nguyen Tan Dung has approved the government inspectorate's findings about illegal activities by state-owned Electricity of Vietnam, but so far no actions have been taken against the firm.
The Government Inspectorate, which first published its findings last October, told a press conference on Friday that it had asked PM Nguyen Tan Dung to punish violators at EVN.
The Ministry of Finance, and the Ministry of Industry and Trade also need to review their failings in management, inspectors said.
According to the findings, as of 2011 EVN had invested more than VND121 trillion (US$5.7 billion), or 150 percent of the company's total chartered capital, in "outside businesses," including non-core areas but failed to make any profits on them.
In 2011, 11 of EVN's electricity production projects saw a total increase of nearly VND224 billion ($10.5 million) in costs due to mistakes in accounting.
Between 2005 and December 2012, EVN failed to launch 20 projects on time, leading to a shortage of electricity and rises in prices.
EVN was also found illegally including in its P&L account nearly VND600 billion ($28.4 million) spent on building houses, villas, tennis courts, swimming pools, and other facilities for its staff.
The company accounted for them as "administrative buildings" for six thermal power plants in Can Tho, Hai Phong, Quang Ninh, and other places, under approval by the Ministry of Industry and Trade.
Inspectors asked the finance ministry to collaborate with the trade ministry and the construction ministry in reviewing the expenses of administrative buildings and staff housings at EVN projects, and report their findings to the PM next month.
EVN and its hydropower plants owe more than VND533 billion ($25.2 million) to the central and local forest management and protection funds, inspectors said.
They also asked the finance ministry to deal with VND3.1 billion ($146,400) that EVN wrongly paid their leaders in 2010 and over VND5.2 billion ($245,600) it spent on buying cars.
At the press conference, representatives of EVN and the government inspectorate also discussed the company's loans to and from one of its former subsidiaries that had raised suspicions among the public when inspectors' findings were first released.
According to the government inspectorate, EVN lent $300 million with an annual interest rate of some 2 percent to Pha Lai Thermal Power Joint-stock Company for investment in the Pha Lai 2 plant in the northern province of Hai Duong.
The loan came from Japanese official development assistance to the Vietnamese government with the interest rate of 1.8-2 percent a year. It was given to EVN through the Ministry of Finance.
After that, EVN borrowed VND2.35 trillion ($111 million) from Pha Lai with the annual interest rate of some 17 percent for its investment in hydropower plants.
While it was unknown when the loans were made, Thanh Nien reporters found that in 2012, Pha Lai paid VND206 billion ($9.7 million) in interest to EVN, but earned nearly VND330 billion ($15.6 million) in interest from its loan to EVN.
As of 2012 Pha Lai still owed EVN over VND6.9 trillion ($325.9 million).
Speaking at the press conference, EVN's deputy general director Dinh Quang Tri said Pha Lai was once a subsidiary of EVN, but it was privatized in 2006.
He said they at first asked the Ministry of Finance to lend the money directly to Pha Lai, but the ministry refused saying that the loan must be made through EVN because the company was in charge of managing electricity production.
When EVN took a loan from Pha Lai, the company already had many shareholders who did not accept low interest rates so they had agreed on a rate in accordance with what banks offered, according to Tri.
The loan EVN gave to Pha Lai and the one it made from the latter were not against Vietnamese laws, he said.
Ngo Van Khanh, deputy chief of the government inspectorate, also said they found no violations in the loans.
The public should understand that lending and borrowing money are two different stories and should not be related to avoid misunderstandings, he said.
Producing 70 percent of the electricity in Vietnam and being the country's sole distributor, EVN reported that its accumulated losses were VND38 trillion ($1.8 billion) in 2011 and VND19.8 trillion ($930.2 million) in 2012
Since December 2011, EVN has increased power prices five times, claiming the hikes were necessary to cover the increasing costs of inputs like coal and gas. But its claims caused skepticism among consumers and economists due to the lack of transparency in its price calculations and business performance.
Vietnamese power now costs VND1,508.85 (7.1 cents) per kWh, after the latest adjustment on August 1 this year.
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