Vietnam energy giant tries to bail from sinking shipyard after years of debts and losses

State-owned oil and gas group PetroVietnam is preparing to declare a shipyard it controls bankrupt after reporting more than a combined $460 million in debt and losses at the end of last year.

In a report filed to the trade ministry, the energy giant asked for permission to sell Dung Quat Shipyard in the central province of Quang Ngai. If no buyer can be found, it will hold a bankruptcy sale, it said.

PetroVietnam took over the shipyard from the debt-ridden shipbuilder Vinashin in 2010 as part of the government’s efforts to rescue the latter. Vinashin, which had piled up $4.5 billion in debt, was restructured into the Shipbuilding Industry Corporation in 2013.

Dung Quat owed nearly VND7.5 trillion ($330 million) at the time, almost twice its registered capital, and the financial woes have never been solved. PetroVietnam said it has pumped VND5.1 trillion ($224 million) into trying to keep the business afloat, but with little success.

By the end of last year, losses at Dung Quat had escalated to VND3.72 trillion ($163.6 million), besides VND6.9 trillion ($304 million) in debts.

The shipyard employs more than 1,200 workers, according to local media reports. No plans have been revealed on the compensation or support they will receive if the proposal is approved.