The general director of the Electricity Group of Vietnam (EVN) will be dismissed if the company posts losses for two consecutive years under his regime, the Ministry of Industry and Trade ruled in its draft decree on the management and organization of the state-run power giant.
The draft decree states that the EVN chief post will be assigned by the ministry, which also holds the right to sack and end a contract before the term is due with the CEO if he fails to lead the company into gains.
The CEO will also be dismissed if EVN fails to achieve the equity to asset ratio target, or has mixed business results of losses and profits for many consecutive years.
Moreover, in the above loss cases, the CEO, as well as chairmen of the board of members, will not only be dismissed but will also have to compensate for the damages as required by the company regulations, the draft decree states.
But the CEO is allowed to keep the chair in case EVN suffers losses that have been planned or caused by objective reasons that are accepted by relevant agencies, the bill notes.
In February 2012, the Prime Minister dismissed Dao Van Hung, who was then EVN chairman, as the company had been making losses while under his control, with the loss-stricken EVN Telecom the most infamous example.
Besides EVN Telecom, which was forced to accept an acquisition by the military-run Viettel Group to avoid insolvency, EVN also incurred enormous losses from other investments in non-core businesses.
By the end of 2010, EVN had sunk a total of VND2.44 trillion (US$117.1 million) in investments into EVN Telecom, while also covering expenses of more than VND1 trillion to supply terminal devices for the telecom operation.
EVN’s total registered capital topped VND143.40 trillion, roughly $7 billion, as of December 31, 2012, according to the draft.
The company is required to operate with profit, and fulfill the tasks it is assigned by the government, the bill says.
The EVN board of members, meanwhile, is granted with many powers, especially the right to adjust power prices within the scale required by the government.
Power prices in Vietnam have remained unchanged since the 5 percent hike last December.
Earlier this month, EVN asked its subsidiaries to maximize power purchases from China to ensure sufficient power supply for the economy.
The increased electricity purchases are also intended to ensure supply for schools across the country that will host the three-day national high school graduation exams starting June 2, it said.