PVN wants deposits unfrozen to fund delayed, cash-strapped power plant

The deposit accounts of PetroVietnam Construction JSC (PVC) and Petroleum Industrial and Civil Construction JSC (PVC-IC) have been blocked since the embattled bank was acquired by the central bank for zero dong in 2015.

The state-run PetroVietnam (PVN) is building the 1,200MW Thai Binh 2 thermal power project, part of the Thai Binh Power Center in the northern province of Thai Binh, and PVC is the EPC contractor with a $1.2 billion contract.

The Ministry of Industry and Trade reported to the government recently that only 83 per cent of the plant has been built though the work has been going on for six years now.

Its first turbine should have gone on stream three years ago.

Unfreezing the deposits is one of the funding solutions PVN has proposed to relevant authorities.

Of the VND127 billion ($5.5 million), VND82 billion ($3.53 million) belongs to PVC.

In response to PVN’s plea, the State Bank of Vietnam (SBV) said it is instructing OceanBank to outline a restructuring plan for submission to the government.

The deposit issue would be handled as part of the bank’s restructuring, with the money returned to depositors in phases after approval from authorities, it said.

The 2010 Law on Credit Institutions limits credit lending to a single customer to 15 per cent of a bank’s equity.

So PVN has petitioned the SBV to give approval to banks seeking permission to exceed the limit. The central bank has promised to seek the government’s permission for banks to exceed the cap.

But it said PVN has failed to submit a full set of documents related to the Thai Binh 2 project’s amended investment capital and feasibility study.

PVN has also sought permission to borrow from the state-run Vietnam Development Bank (VDB) as another financing option.

But the SBV rejected this proposal saying the project is not entitled to the government’s policy credit.

The Ministry of Industry and Trade, which oversees the power sector, said it wants the government to instruct the SBV to submit a restructuring plan for OceanBank soon so that the issue of PVN subsidiaries’ deposits at the bank could be addressed early.

PVN recently urged authorities to allow PVC to continue being the EPC contractor, and said it plans to have the first turbine running by June 2019 and the second three months later.

A court ruling last May found Dinh La Thang, former chairman of PVN, responsible for the actions of PVC general director Trinh Xuan Thanh that caused losses of more than VND119 billion ($5.24 million) to the Thai Binh 2 project.

The court said Thang violated regulations by assigning PVC as the EPC contractor for the plant.