PetroVietnam burns VND5.4 trillion in ineffective ethanol factories

08:36 | 03/11/2016
A series of violations have been uncovered within the groves of Vietnamese state-run oil and gas group PetroVietnam and its member companies when they burnt over VND5.4 trillion ($239.2 million) in three ineffective ethanol factories in Quang Ngai, Phu Tho, and Binh Phuoc provinces, according to newswire Dantri.

These conclusions were made by the Government Inspectorate of Vietnam after reviewing the construction and operation of the factories in the period between October 3, 2014 and January 1, 2015.

Notably, between October 2007 and March 2009, PetroVietnam directed PetroVietnam Central Biofuels JSC (PCB) and PetroVietnam Coating Corporation (PVB) to contribute capital to establishing two joint stock companies and a joint venture company to develop ethanol factories in the three above provinces. These factories were expected to produce 100 million litres of ethanol each per year.

According to the report, the total investment capital for the three factories was worth more than VND5.4 trillion ($239.2 million), which the Inspectorate considered a waste due to inefficient production and operations. In addition, investors were detected to have committed numerous violations in using the investment capital, boosting expenses far beyond the expected capital.

Notably, according to the plans, Binh Phuoc ethanol factory was to have a total investment capital of VND1.492 trillion ($66.1 million), however, at the date of inspection, it was already up to VND1.74 trillion ($77.09 million). The expected cost of the bio-ethanol Dung Quat project increased from VND1.493 trillion ($66.2 million) to VND2.124 trillion ($94.1 million).

Meanwhile, the authority also detected violations by PetroVietnam Construction Joint Stock Corporation (PVC), the constructor of the Phu Tho ethanol project. Notably, the project was to be implemented by PVC under an engineering, procurement, and construction (EPC) contract worth $59 million. However, the investor PVB and the contractor arbitrarily increased the contract value to more than $73.3 million. The move contributed to exceeding the expected costs.

In addition, PVC broke the contract’s clauses when it stopped implementing the project halfway through in November 2011.

As of now, Binh Phuoc Ethanol Factory had to be closed down after completing its trial run, while bio-ethanol Dung Quat has temporarily suspended operations after weathering four years of continuing losses. Bio-ethanol Dung Quat currently shoulders unpaid debts of VND1.3 trillion ($57.6 million).

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By By Ha Vy

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