State-run Vietnam National Oil and Gas Group or Petro Vietnam has made several wrongdoings in capital and asset management, which have cost VND30 trillion (US$ 1.5 billion), reported the Government Inspectorate yesterday, April 5.
The Vietnam State Inspectorate released that Petro Vietnam suffered huge losses when investing in non-core businesses, which cost the state budget a huge loss of VND18.2 trillion (US$873.6 million).
Petro Vietnam allocated VND1.26 trillion for subsidiaries of small companies, all of which have been operating without gain in 2009, and VND2.37 trillion for others in 2010. These sums of money had been used for wrong purposes, thus billions were invested ineffectively, the Vietnam State Inspectorate concluded.
Reports pointed out that the total capital of Petro Vietnam by the end of 2010 was some VND470 trillion, and profits gained during the 2006-2010 period topped nearly VND34 trillion.
Moreover, Petro Vietnam allocated a total capital of VND622 billion to Soc Trang, Ha Tinh, Quang Binh and Hau Giang Provinces for these localities to complete site clearance tasks, without permits from the Prime Minister.
Petro Vietnam also released VND15.6 trillion to buy shares of the joint venture company Rusvietpetro and fund the operation of the General Company of oil and gas exploration, which violated the regulations of business law, State inspectors said.
Figures from Petro Vietnam’s audit financial report proved that it had made unprofitable investments: buying Pavlovk fishing vessel and turning it into an exploration ship (built in 1983, 10 years older than a standard ship) and buying and constructing some buildings.
The Government inspectors told a press briefing that Petro Vietnam has also invested in projects in other provinces like Ca Mau, Dung Quat (Quang Ngai) that were unable to gain profits or even get back the capital.
For instance, Petro Vietnam invested nearly VND12 billion from the fund for scientific research and training to establish the Dat Mui high school in Ca Mau, an investment Vietnam State Inspectorate said was against state regulations because these local projects suffered heavy losses.
It was also found to have deducted VND352 billion from the fund for oil and gas investment and development and given the amount to Ca Mau City to build a road connecting the city’s downtown and the Ca Mau Gas-Power-Fertilizer Industrial Park.
“With such a massive sum of capital and asset in hands, Petro Vietnam has made a lot of mistaken investments and capital allocations,” said a Vietnam State Inspectorate representative, while recommending that VND18.2 trillion be returned to the state budget.
Petro Vietnam has defied the laws to earmark more than VND15.6 trillion from the profits earned from selling oil and gas for financial activities that are not listed in key oil and gas investment projects, Vietnam State Inspectorate elaborated.
Petro Vietnam has also yet to fully retrieve VND1.99 trillion earned from its equities and the interest worth VND185 billion, Vietnam State Inspectorate informed.
By the end of 2010, Petro Vietnam had sunk nearly VND114.6 trillion into investments for its subsidiaries and non-core sectors, with VND11.4 trillion earmarked for the power sector, which has yet to produce any profits since all the projects are under construction.
In this press meeting, Vietnam State Inspectorate also concluded that wrongdoings at Song Da Corp cost the state US$512 million.