EVN proposes to raise market-based electricity prices

After coal and petrol giants, Electricity of Vietnam (EVN) proposed the government to allow it to raise electricity prices according to market base. Due to shortage of capital and water, EVN forecasted the northern region will seriously lack electricity this year.

The proposal was made at a meeting of summing up EVN’s 2010 operations, held on January 10 where the group’s deputy general director Duong Quang Thanh said that the power supply this year would be very tense. The surcharge will continue rising strongly by 17.63 percent in 2010 as a whole, separately it may grow 18.3 percent in dry season.

Till last December 31, water levels at hydropower dams were much lower than the full levels. It is estimated to be short of 12 billion cubic meters of water equaling to about 3 billion kWh.

“Electricity industry is facing severe difficulties, and EVN has to produce and buy electricity from alternative sources with a high price while the electricity price on market is under heavy pressure because of not yet adjusted up. To raise capital, EVN proposes a market-driven price mechanism”, Thanh said.

Nguyen Phuc Vinh, general director of Vietnam Northern Electricity Corp was quoted as saying that power prices were too low compared with market levels. If not allowed to revise, the group as well as the corporation cannot balance their capital source, forcing ten northern provinces to import “made in China” power at 1,400 dong per kWh (import tariff and transport charges inclusive). The corporation, meanwhile, sells electricity at 750 dong to many entities, only a half of import price.

According to the general director, the power supply in first 6 months of 2010 will be very difficult because of severe capital shortage. This year EVN needs 54 trillion dong for operate FO and DO-fed electricity plants but they do not know where to take such a huge capital amount as banks refused to lend. In 2010, the corporation borrowed 500 billion in bank loans to improve the grid for 3,200 communes but 400 billion dong of the proceed was spent on repairing grid as floods hit Nghe An and Ha Tinh provinces.

In a bid to improve the difficult outlook, Vinh proposed, setting up a steering board or power distribution council led by each provincial People’s Committee along with the participation of local industry and trade department to save electricity was needed. In addition, banks are required to provide preferred loans to the power industry.

Sharing the above worry, Nguyen Huu A-Director of Can Tho Thermo Power Co said that last year his firm lost 3 trillion dong. This year its two plants including O Mon and Can Tho are expected to produce about 2 billion kWh. Under pressure of petrol prices and rising forex rates, the firm needs 2 trillion dong for monthly operation expenditure but the matter of electricity loss remains serious.

Power transmission cost of Vietnam is about $cent 0.32 per kWh while the figure of other countries is $cent 1, Nguyen Manh Hung-General director of Electricity Transmission Co noted. For 2011, 2015, EVN demands 150 trillion dong while its debts climbed to 46 trillion dong. – Vietbiz24

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage