A corner of Lai Chau hydro-power plant in Muong Te District in northern Lai Chau Province. A decree released last week has laid out strict financial management rules for the EVN. — VNA/VNS Photo Ngoc Ha

HA NOI (Biz Hub) — The Prime Minister has issued Decree 82/2014/ND-CP on the financial management of Vietnam Electricity (EVN).

The Decree, issued on August 25, stipulates that EVN's capital for business activities includes funding from the Government, other investments and funds.

The corporation will have to abide by strict capital management standards and must report any losses, unmet payments or misconduct to the Ministry of Finance (MoF).

EVN will be allowed to raise capital from domestic or overseas sources, whilst being held responsible for the efficient use of capital, loan repayments and interests to creditors.

Under the new rules, the company's liability-over-equity ratio must not be more than 300 per cent, including guaranteed loans by EVN-invested enterprises.

The corporation can raise capital through issuing bonds, bills and debentures; or incurring loans. It can also mobilize unused capital from subsidiaries whose charter capital is wholly owned by EVN, and they cannot purchase shares in EVN units following their equitisation.

The corporation will need be required to get permission from shareholders to borrow funds, while interest rates are not permitted to exceed the market rate.

The Decree also says that EVN can invest its capital in the businesses defined by its operation and organization charter.

External investments must comply with the law and guarantee the efficient development of capital, increase earnings and be consistent with EVN's stated targets.

EVN is forbidden from making investments and financial contributions in a number of fields, including real-estate projects, bank shares, insurance companies, securities companies or securities investment funds.

The corporation is also not allowed to take investments from subsidiaries and secondary enterprise subsidiaries. — VNS