Electricity producers facing difficulties in price negotiation with EVN
The Electricity of Vietnam (EVN), the country’s power group, is managing and operating about 51.3% of total power capacity of the whole system. Including the electricity sources in which EVN holds majority stake, the ratio will be 71%, according to data of Ministry of Industry and Trade.
Foreign and other private investors own and run only 10.4%. Remainder of the power capacity belongs to the giants including PetroVietnam, Vinacomin and Vietnam Industry Construction Group.
Industry experts opined that the EVN’s monopoly has made the sales and purchase of electricity difficult. Vu Manh Hung, Vice CEO of Vinacomin was quoted as saying that Vinacomin started to join development of power projects from 1998 with Hai Phong 1and 2, Quang Ninh 1 and 2…But, many projects were prolonged and lagged due to failure in price negotiation with EVN. Even, some plans that were to be operated still are under price negotiation, namely Song Dong and Cam Pha.
According to Nguyen Khac Son-General Director of Pha Lai Thermal Power Joint Stock Co, his firm is one of lucky customers that has ben able to successfully sign electricity selling contract in four years with EVN at a price of 700 dong per kWh. The selling price is adjusted every month. When coal and oil prices increase, electricity price will be corrected as well.
The core reason of the difficulty in electricity price negotiation was that EVN wants to enjoy a certain profit to ensure its business cost. If purchase cost of electricity generating companies is high, EVN may suffer loss. He shared, “Enterprises have to negotiate a long term contract because EVN still will have to do cross-offset for various objectives, prices among member companies and external firms are different”.
Not only electricity sellers as well as buyers with EVN are complaining due to insufficient electricity supply. Dao Huu Huyen, Director of Duc Giang Chemical and Detergent Co (DGC) stressed, his company had to pay 15-30 billion dong a month to Lao Cai Power but several investment projects of DGC are struggling hardships because of electricity.
Vietnam’s Electricity Law rules that producers must supply electricity sufficiently to construction works but the process has taken place slowly. He cited, phosphate 1 factory of his company has been lagged in 3 months. “We are going to start running turbine 2 of the factory in July but till now we have not have backup grid. Because of lacking a grid of electricity, all phases have to be suspended to wait for reply from electricity suppliers”, he added.
DGC leaders are always nervous in every electricity price increase. Pursuant to the government’s Decision 24, electricity price may be adjusted once 3 months but electricity selling and buying contracts cannot be signed for 3 months.
“Electricity suppliers want enterprises to share difficulties but when firms demand, the suppliers ignore”, he emphasized. “Electricity companies and businesses need to negotiate without basing on price frame of 1,900 dong per kWh at rush-hours, and 1,200 dong/kWh at low-hours.”
Electricity price ruled by the government has caused hardships for both sellers and buyers who are difficult in price negotiations because in fact, input costs are changing quickly. The Prime Minister was proposed to offer average electricity selling price and specific price will be made by seller and buyer, according to Duong Quang Thanh-Deputy General Director of EVN said. – Vietbiz24
Tags: Vietnam electricity, Vietnam electricity prices, Vietnam energy
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