Energy association backs EVN in seeking financial sources

Vietnam Energy Association (VEA) has proposed to the government and relevant agencies on seeking preferential loans for the Electricity of Vietnam Group (EVN) to speed up the pace of energy projects that are under construction, according to newswire Vnexpress.
According to VEA, in fact, the pace of most power projects, such as Nhon Trach 2, Hai Phong 1, 2, Quang Ninh 1 and Duyen Hai, has been delayed because of weak capacity, inexperience and finance issues of contractors.

VEA said that the provisions on allowing maximum lending 15 percent of equity for each enterprise and the short term capital use ratio for long-term loans at maximum 30 percent have impacted the capital mobilization of commercial banks for energy projects, especially key projects that are scheduled for long-term construction.

Therefore, VEA proposed the government to allow EVN to sign commercial loans and soft loans with suitable lending interest rate to invest in its power without appraisal and collateral, at the same time expand the domestic soft loans for all power projects.

In addition, according to VEA, Chinese contracts will be allowed to join support sections only when they win bidding contracts as prescribed.

In tenders, financial capacity and experience should be given priorities rather than auctions as in the past.

VEA stressed that it is necessary to encourage contractors and investors in the group of G7 countries and EU to strongly develop coal-fired thermo power sources.

When those foreign investors investing in Vietnam under the form of BOT (build-operate-transfer), BOO (Build-Own-Operate) and IPP, if they have enough capacity, experience, and finance, it will be better to choose investors from developed countries.

Burdened with debts

As of August 2011, EVN has posted total accumulated loss of about 31.565 trillion dong, according to Dinh Quang Tri, EVN’s deputy general director. EVN’s solvency is very difficult because the group cannot balance its capital sources for debt repayment, Tri said.

Currently, EVN owes many other economic groups such as Vietnam National Oil and Gas Group (PetroVietnam) with over seven trillion dong debt, Vietnam National Coal and Minerals Industries Group (Vinacomin) with 10 trillion dong and Song Da Group with over 5.5 trillion dong.

Many economic groups are proposing the Ministry of Industry and Trade to urge EVN to repay for debts.

EVN has recently sent documents to the government asking to give priorities in repaying for foreign debts totally at about 4-5 trillion dong per year.

If EVN is allowed to hike electricity price, it will use the difference in power price to repay for debts at PVN and Vinacomin.

But the Ministry of Finance has urges EVN not to raise rates more than once per quarter due to possible negative impacts on the economy, Vietnam News Agency quoted minister of Finance Vuong Dinh Hue as saying.

Hue has sent a document to minister of Industry and Trade Vu Huy Hoang responding to Hoang’s proposals on taxes, fees and prices for a number of commodities, including electricity.

In the document, Hue agreed in principle that electricity rates needed to increase to reflect actual costs, but the rate and timing of increases needed to depend on the economic situation.

In the current economic situation, he said, EVN needed to co-ordinate with the ministries to establish a general plan for increasing electricity rates based on input costs, such as coal prices.

The plan should consider specific economic impacts on major industries from increase in electrical rates, Hue said.

EVN arm eyes divestment

EVN Telecom, a subsidiary of state-owned Electricity of Vietnam (EVN), is submitting to the government a plan to sell its stake to Vietnam Multimedia Corp or Vietnam Television Corp (VTC), Dau Tu newspaper reported.

Initial information said that EVNTelecom will sell 12 percent stake to VTC. VTC plans to spend an amount of VND800 billion on this deal.

In January 2011, the government agreed the plan to make equitization for EVNTelecom whereby EVNTelecom will sell a part of state holding to strategic investor and offer preferential shares to the employees.

Of which, EVN will hold 50.6 percent stake, 0.4 percent stake will be held by the employees and 49 percent stake for FPT Co and FPT Telecom Joint Stock Co (FPT Telecom).

However, FPT would like to hold 60 percent stake in EVNTelecom, therefore, FPT withdrew this deal although the group had already deposited over 700 billion dong for this trade deal.

Presently, FPT is not sure when to take back the deposit.

EVNTelecom manages and develops mobile and fixed phone services and internet.

Currently, It has over 4.7 million subscribers including both mobile and landline users.

EVNTelecom’s 3G network has covered 63 provinces and cities but it is only providing basic services in HCM City, Hanoi, Hai Phong, Da Nang and Can Tho.

Tags: EVN, Vietnam energy, Vietnam energy industry, Vietnam Energy sector