Vietnam Electrical Construction JSC (VNECO) has recently encountered some challenges, as indicated by their recent announcement regarding a court petition for bankruptcy proceedings. This development comes as a result of outstanding payments to Song Da 11 JSC (SJE) amounting to nearly VND 7 billion, including overdue payments of VND 4.4 billion and retention money of VND 2.7 billion.
Prior to this, VNECO and SJE had entered into a construction contract for Package 6 of the “Construction of 500kV power line connecting Nghi Son 2 Thermal Power Plant to the national grid,” with a total value of over VND 37 billion. VNECO has made payments and offset debts to SJE totaling more than VND 30 billion.
The delay in full payment by VNECO has prompted SJE to file for bankruptcy proceedings against the company. This situation is further complicated by the fact that VNECO’s former CEO, Tran Quang Can, has not yet handed over relevant documents and procedures related to payments, debts, and other matters that occurred during his tenure.
Additionally, VNECO has failed to organize its annual general meeting for 2024, despite obtaining approval for a deadline extension until June 30. The company, once a leading electrical construction enterprise, has experienced a decline in financial performance in recent years, reporting losses in 2023 and the first half of 2024.
One of the main factors contributing to VNECO’s losses is the high interest expense. As of June 30, the company’s total financial borrowings stood at VND 1,700 billion, 1.8 times their equity. In contrast, their cash and bank balances have dwindled to approximately VND 42 billion.
VNECO, formerly known as Construction Electricity 3, was established in 1988 and operates in the fields of technical, construction, and equipment supply for the energy, industrial, and infrastructure sectors. Despite positive prospects in the past due to the increasing demand for new construction and repairs of high-voltage power lines and substations in Vietnam, the company has faced setbacks in recent years.
With the approval and impending construction of the 500 kV Mach 3 extension project (Quang Trach – Pho Noi), VNECO was expected to benefit from its role in the execution of the project. However, their financial struggles and the recent bankruptcy filing have cast a shadow on their future involvement.
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