EVN’s huge debts may drive up electricity prices

The state-owned Electricity of Vietnam Group (EVN) owes approx VND10 trillion and has lost over VND11.6 trillion since 2010, which may soon lead to a power price increase.

The Ministry of Industry and Trade announced, at a meeting on August 3, that EVN has yet to settle its debts of nearly VND10 trillion (USD485.2 million) from purchases of electricity from Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam National Coal-Mineral Industries Group (Vinacomin).

According to the ministry, last year EVN lost a total of VND8.185 trillion (USD397.13 million), and its loss reached VND3.5 trillion (USD169.82 million) in the first six months of 2011.

The ministry said that low power prices is among the major reasons for EVN’s debts and losses.

In order to ensure EVN’s businesses, power price will be increased to eight to nine US cents per kWh by 2020 from current average of six US cents, said Deputy Minister of Industry and Trade Hoang Quoc Vuong.

In addition to the planned power price hike, EVN will be allowed to raise power prices by up to 5% when production costs increase sharply. Vuong said that the aim is to encourage investment in the power generation industry.

Under the national power development plan for the 2011-2020 period, or Plan VII, Vietnam’s total power output is expected to reach 194-210 billion kWh by 2015 and 330-362 billion kWh by 2020.

The plan prioritises the development of renewable energy sources, and sets the target of making renewable energy account for 4.5% of the total national power output by 2020. Last year, it made up 3.5%.

In order to realise these goals, Vuong said that there is an urgent need for VND929.7 trillion (USD45.1 billion) to invest in various power projects in the next decade. This means that each year USD4.51 billion would have to be mobilised. – Dan tri

Tags: Vietnam electricity, Vietnam electricity prices, Vietnam energy

Posted by VBN on Aug 6 2011. Filed under Energy. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry