EVN inspection spells two counts of trouble

January 30, 2018 | 11:02
The Government Office has just announced the conclusions of Deputy Prime Minister Vuong Dinh Hue on the financial inspection of state-run Electricity of Vietnam (EVN).
MoF demands more than VND1.9 trillion ($85 million) in tax arrears from EVN after discovering that the group had failed to declare its costs accurately

DPM Vuong Dinh Hue requested the Ministry of Finance (MoF) to clarify the differences in the payment of transportation fees for the gas pipeline from Phu My to Ho Chi Minh City in the 2012-2015 period and the difference in the interest rate of the original foreign currency-denominated debts of the parent company (EVN).

Earlier, in the inspection conclusions, MoF announced that certain numbers were not in accordance with regulations, decreasing revenue and profit in the 2015-2016 period.

Particularly, in 2015, EVN recorded over VND1.34 trillion ($59 million) of difference in transportation fees for the gas pipeline from Phu My to Ho Chi Minh City during 2012-2015, instead of the VND1.938 trillion ($85.5 million) it should be.

This decreased the company’s profit significantly. In order to fix this, MoF suggested that EVN should pay an additional VND88.2 billion ($4 million) of corporate income tax for 2015 and pay an additional VND877.4 billion ($38.7 million) worth of after-tax profit for 2015 to the state budget. Besides, EVN did not record VND4.847 trillion ($213.5 million) of revenue from financial activities in 2016.

Responding to the MoF conclusions, EVN provided an explanation for the VND1.938 trillion ($85.5 million), claiming it is a retroactive expense for transportation fees. "Because this amount was not recorded in the adjustment scheme of the retail price of electricity, it is included in the production and business costs in 2017," confirmed EVN.

As for the VND4.847 trillion ($213.5 million), EVN said that it came from Nghi Son 1 thermal power plant project which is invested by GENCO 1, according to Decision No.3023 of the Ministry of Industry and Trade. This project used loans from the Japan International Co-operation Agency (JICA), forcing EVN to become an investor of the project before transferring it to GENCO 1.

Then, Nghi Son 1 thermal power plant was approved to be transferred to GENCO 1 by the prime minister in the plan to restructure EVN in the 2017-2020 period. Thus, the project is owned by GENCO 1, and profit from the exchange rate difference will be noted by GENCO 1.

The representative of EVN said that they are currently working to hand over Nghi Son 1 thermal power plant and its balance of exchange rate difference to GENCO 1.

By By Nguyen Huong

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