Vinalines sails into stormy financial seas

Financially troubled state-owned Vinalines is weighing up divesting from three port projects as a part of its comprehensive restructuring plan.

The government, in a report sent to the National Assembly last week, said  Vinalines would review and restructure its capital contributed to joint ventures with foreign partners at Cai Mep-Thi Vai area in southern Ba Ria-Vung Tau province.

Vinalines will “analyse the efficiency of the method for reducing state investment capital and increase contributions of private partners, including foreign ones in the ports,” said the report. Cai Mep International Terminal, SP-PSA International Port and SP-SSA International Container Terminal are jointly invested by Denmark’s APM Terminals BV, Singapore’s PSA International and US’ SSA Marines, respectively. Vinalines now holds 51 per cent stakes in each port.

The divestment of Vinalines, if approved, will give its foreign partners a chance to increase capital in these ports or look for other potential partners. Vinalines will also restructure and equitise its members operating ports nationwide.

The plan comes as Vinalines sinks more deeply into financial trouble.  According to the report, the financial prospects of the national shipping line is “very difficult”. Till the end of 2010, Vinalines’ total asset amounted to VND55.8 trillion, or $2.68 billion at the current exchange rate. Meanwhile, the corporation’s total debt is VND43.13 trillion ($2.07 billion), of which $1.6 billion was borrowed to invest in port projects and for ship-repairing.

The situation was worse as Vinalines lost VND434 billion ($20.8 million) last year. In the first four months of this year the corporation continued losing, said the report. The government also pointed out that ineffective investments in ports and its fleet, in line with management and market forecast weakness  were the key reasons for the group’s financial woes.

Last month, the Ministry of Public Security officially announced the results of initial investigations into Vinalines and issued an arrest warrant for former corporation chairman Duong Chi Dung, who is still at large.

The ministry also put Mai Van Phuc, deputy director of the Ministry of Transport’s Transport Department and Vinalines’ former general director, and Tran Huu Chieu, Vinalines’ deputy general director under temporary detention for the investigation.