Five giant companies weighed down with foreign debt

Most of the foreign debt incurred by state-owned general corporations are in their core business fields, and as such they have to look for capital to run projects.

1.The fact that Electricity of Vietnam (EVN) tops the list of the five biggest debtors with the holding company owing VND162 trillion to its creditors is not a surprise, because of the high investment rate of several billions of dollars for every project.

A report of the Ministry of Finance shows that in 2014 Vietnam signed 41 ODA (official development assistance) agreements with total loans of US$4.7 billion. Of this amount, US$1.85 billion, or 31.6%, would be allocated to the Ministry of Industry and Trade which will most only fund power projects. 

The Vinh Tan 4 thermal power plant alone will need huge investment capital of US$1.6 billion, of which more than US$1 billion would be loans from South Korean KEXIM, KSURE Banks and Japanese JBIC.

In 2014, EVN also borrowed US$108 million from BNP Paribas, while the National Power Transmission Corporation, a subsidiary of EVN, borrowed US$245 million from Citibank under a credit agreement guaranteed by the government.

2. Vietnam Airlines holdings owe VND27.347 trillion to foreign creditors. Of this, US$1.2 billion (VND27 trillion) will be used to buy aircraft. The two loans from HSBC France alone have exceeded US$110 million.

Most recently, the government has acted as a guarantor for Vietnam Airlines’ borrowing of US$600 million which will be spent to buy four Boeing 787-9s.

3. PetroVietnam holdings of foreign debt have reached VND20.305 trillion. Like other state-owned conglomerates, PetroVietnam needs money to run costly oil and gas projects. The loans it got in 2014 were from JBIC, NEXI, KEXIM and HSBC, worth $85 million to $600 million.

The Vung Ang 1 thermopower project developed by the oil group with cost of US$1.6 billion was completed last September. Seventy percent of the capital was from loans.

PetroVietnam is developing Thai Binh 2 thermopower project, under which the equipment procurement package alone costs US$795 million.

4. VEC, the expressway development corporation, has foreign debt worth VND18.525 trillion.

A VEC report shows that it has mobilized VND54 trillion in capital to arrange 43 percent of the total investment capital for five big projects. The funds were raised from construction work bonds and commercial loans from domestic and foreign institutions.

One of AEC’s biggest problems is its high ratio of debt on capital. The corporation has proposed the government increase its chartered capital from VND1 trillion to VND22.1 trillion.

5. The Airports Corporation of Vietnam (ACV) has reported foreign debt of VND12.138 trillion.

The debt includes loans from a Japanese financial institution. A Q3 financial report showed that its ODA debts alone had reached 78 billion yen, or US$600 million.