Electricity of Vietnam has a debt-to-equity ratio of 4.25, much higher than the average 1.98 for the country's state-owned enterprises, news web site VnExpress reported Saturday, citing the Ministry of Investment and Planning.
The report said that the high ratio means the debt is really large, considering the group's equity was valued at VND56.4 trillion (US$2.68 billion) last year.
According to the ministry, the safe ratio of debt to equity is 3. The only other state-owned company with an unsafe debt ratio at 3.91 is the Vietnam Construction Industry Group.
The electricity monopoly, known as EVN, has invested more than VND2.1 trillion in risky sectors like securities, real estate and insurance. Although the group posted a profit of around VND2 trillion a year, it had a very low return on equity of only 3.84 percent, the ministry said.
That compares to an average ratio of 16 percent recorded by listed companies in Vietnam.
The Ministry of Investment and Planning said the financial situation of EVN is now risky.
"For companies with effective and sustainable business, and a high return-on-equity ratio, the more loans they take out, the greater the benefits. But with companies operating inefficiently, more loans translate to bigger difficulties," Deputy Minister Dang Huy Dong said.
An EVN official argued that if the debts at its subsidiaries are excluded, the debt-to-equity ratio is actually at a safe level. The group will try to deal with the debts of its member companies and increase its capital, the official said.
This was not the first time EVN has faced criticism for its financial performance.
A Party unit overseeing the state enterprise sector said in a report last month that the group's investments outside its main business were ineffective. EVN Telecom, for example, posted a loss of more than VND1 trillion last year, it said.