EVN re-asks electricity price increase due to ‘capital shortage’

The biggest difficulty the Electricity of Vietnam (EVN) has faced during the first five months was in accessing capital for major projects under construction, and the capital shortage has made many projects lag in progress, said its Deputy General Director Duong Quang Thanh said on June 6 in the online meeting with Ministry of Industry and Trade.

For example, for Lai Chau hydropower project, due to capital shortage, EVN has not been able to pay costs for contractors while Duyen Hai 2 project has not received proper disbursement because 15% of the corresponding capital of the project was not arranged. In addition, some projects, which had been committed to be financed by China, are being re-negotiated.

In the coming time, the difficulty will be larger for EVN if without electricity price increases, Mr Thanh added. He also proposed to put the 2010 loss into constitution of electricity price adjustment because the loss has not been taken into account.

“EVN cut and extend progress of projects by 12 trillion dong according to the government’s Resolution No 11 but the capital shortage is still there. Ministry of Industry and Trade needs to quickly issue guidance circular of Decision 24 on adjusting electricity prices based on marjet”, he recommended.

Earlier, Dinh Quang Tri-Deputy General Director of EVN said that electricity price could not be increased from June 1. Although the power industry is losing, EVN still has to suffer many difficulties and challenges.

Pursuant to Decision 24, from June 1, electricity price will be adjusted in line with market mechanism. If input cost rises 5%, EVN can increase electricity price with a respective level after registering and gaining permission from Ministry of Industry and Trade. If the cost rises more than 5%, EVN needs to report to Ministry of Industry and Trade and send to Ministry of Finance for appraisal.

The gap between two electricity price increases is at least 3 months, instead of each year as previously, citing the decision 24.

On March 1, electricity price was hiked 15.28% but two ministries confirmed that the hike remained low and the industry still had to suffer loss. – Vietbiz24

Tags: Vietnam electricity, Vietnam electricity prices, Vietnam energy

Posted by VBN on Jun 8 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