Vietnam state firms sit on mountain of foreign debt

Thanh Nien News

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Many have been allocated ODA funds while others borrowed from foreign banks


Electricity of Vietnam
Nearly a third of ODA committed to Vietnam last year was earmarked for EVN projects. Photo credit: VnExpress
A new report from the government says power monopoly Electricity of Vietnam tops the list of entities with foreign debts with debts of VND162 trillion (US$7.2 billion) as of the end of 2014.
Vietnam last year signed 41 agreements for $4.7 billion worth of official development assistance, and 31.6 percent of that has been earmarked for Ministry of Industry and Trade projects, most of them for huge power projects, according to a recent finance report.
A $1.6-billion thermal power plant in the south central province of Binh Thuan is being built with 85 percent funding from Japanese and Korean banks while EVN last year also borrowed more than $108 million from the Paris-based BNP Paribas and $245 million from Citibank.
Vietnam Airlines
Vietnam Airlines, the second biggest debtor, owes nearly $1.22 billion in foreign loans and most of it was for aircraft purchase. It does not include the nearly $600 million the carrier borrowed recently with the government’s guarantee to buy four Boeing aircraft.
The airline, which holds 47.6 percent of the country’s passenger air market, posted a pre-tax profit of over VND1.3 trillion ($57.55 million) for the first nine months, nearly twice the figure of the same period last year.
The carrier sold a 3.48 percent stake in its IPO in November last year, raising nearly $48.7 million, and has announced plans to soon sell around 20 percent to a maximum of three strategic investors.
Foreign debts owed by Vietnam Oil and Gas Group rose to VND20.3 trillion (nearly $903 million) by the end of 2014.
The corporation, known commonly as PetroVietnam, borrowed money for building huge thermal power plants.
One of them, Thai Binh 2, which was completed this year, cost around $1.6 billion and half of that was money borrowed from foreign banks for equipment purchase.
Vietnam Expressway Corporation
The Vietnam Expressway Corporation, which builds all major expressways across Vietnam like Noi Bai – Lao Cai and Ho Chi Minh City - Long Thanh – Dau Giay, owed VND18.52 trillion ($823.7 million) to foreign creditors at the end of 2014.
A company report early this year said it is usually assigned huge projects and always has to borrow money, usually large amounts.
The company asked in October to hike its registered capital of more than VND1 trillion by nearly 22 times since its debt-equity ratio is too high to easily borrow more money. The ratio was not revealed, but some official reports said it has exceeded three, the threshold for a company to sell shares.
Airports Corporation of Vietnam
Airports Corporation of Vietnam, which owes VND12.14 trillion ($540 million), is responsible for major aviation infrastructure in the country.
Most of its foreign debts are owed to Japanese institutions, including nearly $600 million worth of ODA loans.
The government report said debts, both domestic and foreign, owed by state corporations at the end of 2014 increased by 8 percent during the year to more than VND1,500 trillion ($66.7 billion), including around VND381.5 trillion ($17 billion) worth of foreign loans.

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