Efforts in implementation of EVNGENCO1
Implementing the Government's policy on equitizing state-owned enterprises and one-member limited liability companies with 100% of charter capital owned by State enterprises, the equitization for the Parent company - Power Generation Corporation 1 (EVNGENCO1) has been implemented since 2016. By April 2018, the equitization of EVNGENCO1 has been carried out 9/20 steps of equitization plan approved by competent authorities and completed the valuation of enterprises for equitization in accordance with Decree 59/2011/ND-CP issued on July 18, 2011 to submit to the competent authorities according to the approved schedule.
However, due to changes of the law on equitization process, on November 16, 2017, the Government issued Decree No. 126/2017/ND-CP replacing Decree No. 59/2011 / ND-CP, accordingly, the equitization needs to be re-conducted to conform to the new regulations.
On August 15, 2019, the Prime Minister issued Decision No. 26/2019/QD-TTg approving the list of enterprises to be equitized until the end of 2020. Therefore, the Power Generation Corporation 1 belongs to the group of enterprises to be in equitization in which the State holds 50% or less of charter capital or does not hold shares. In order to implement the equitization of the Parent Company-EVNGENCO1 in accordance with the provisions of Decree 126/2017/ND-CP and the equitization plan of Government enterprises, EVNGENCO1 has been recently implementing contents related to equitization.
Land is an important resource, which can affect the value of an enterprise when equitization and ensure that such value is properly reflected. According to the Decree 126/2017/ND-CP issued on November 16, 2017 of the Government which regulated that the EVNGENCO1's land use plan must be approved by the competent authority before the enterprise valuation time decided; then, EVNGENCO1 has developed the plan for housing arrangement and use when equitization and submitted to competent authorities for approval. Up to now, there are 8/10 provinces and cities have approved the land use plan of EVNGENCO1’s equitization which is expected to complete to keep up with the equitization progress as directed by the Government.
In addition, in order to enhance the image and attract investors who are interested in EVNGENCO1's shares when issuing, the Corporation has made a sound financial health, handling difficulties related to finance. Specifically, the increase of charter capital to VND 23,079 billion, whereby the debt/ equity ratio is expected to fall to below 3.0, then the short-term as well as the long-term solvency are guaranteed and implemented; review and handle of bad debts are in line with regulations.
The financial situation of Power Generation Corporation 1 has gradually improved, meeting the requirements of interested investors when buying shares of EVNGENCO1.
There are still many difficulties to overcome
Units/companies under EVNGENCO1 locate in many provinces and cities, so the approval of the land use plan of the Corporation's equitization is very complicated and takes a lot of time to solve. The review and approval of land use plans of localities are still slow, affecting the equitization progress of the Corporation.
Besides, according to the Ministry of Finance's guidance in the document No. 4544/BTC-TCDC dated 18/4/2019 on the plan of land use upon equitization (Document 4544): “the plan for reorganization and handling of houses and land (including land use plans upon equitization of enterprises) of equitized enterprises must include the whole land area of enterprises with capital contributed by the enterprises conducting equitization and not yet arranged according to the provisions of the Land Law, the Law on the management and use of public assets and the legal documents on equitization". The Corporation must elaborate additional plans on arrangement and handling of houses, land and land use plans upon equitization of its subsidiary, i.e Da Nhim - Ham Thuan - Da Mi Hydropower Joint Stock Company to submit for approval of the competent authority. This takes time and affects the equitization progress of the Corporation.
Currently, the Corporation has a number of liabilities of its affiliated units, which had existed before the establishment of the Corporation. Up to now, the subjects have been dissolved, or the legal entity has been changed, so it cannot be recovered, or cannot be in debt comparison. The Corporation has made provisions in accordance with the regulations. Value of these payables is not much, less affecting on the enterprise value of the Corporation; however, the procedure is complicated. The Corporation has asked the competent authorities to guide the handling so as to make financial health and to handle it before equitization.
In addition, there are many inseparable shared infrastructures: seaports, pipelines, construction sites and slag disposal sites, etc between the Duyen Hai 3 and Duyen Hai 3 extension thermal power plants (DH3Ext). The Corporation's land use plan in Tra Vinh province has been approved by the Provincial People's Committee, which has included the extension area of DH3Ext. If the DH3MR thermal power plant project is not transferred to EVNGENCO1, the People's Committee of Tra Vinh province must follow the legal procedures to decide on adjustment and re-delivery for: the land use right certificate, the land allocation decision, the approval document on the plan of arrangement and handling of houses, the land use plans upon equitization of the Corporation in the province and separate for EVNGENCO1 and Electricity of Vietnam (EVN) independently. This procedure working takes a lot of time, affecting the equitization progress of the parent company EVNGENCO1.
With the above mentioned difficulties, the Corporation has reported to EVN and the Capital Management Committee to consult the related ministries: Finance, Industry and Trade, Justice, Planning and Investment to submit to the Prime Minister’s approval so that the DH3Ext project could be handed over from EVN to EVNGENCO1; the Capital Management Committee would be allowed to decide the enterprise valuation time and the equitization of the parent company - EVNGENCO1 would be in 2020. The ministries agreed with the proposal by the Capital Management Committee. Currently, the Capital Management Committee is drafting a report to the Prime Minister.
Besides, the large scale of EVNGENCO1 has many difficulties related to finance; the equitization process involves many ministries and branches, so the consulting in related ministries and branches on solving difficulties and problems takes a long time to affect the equitization progress of EVNGENCO1./.