Power groups want to raise electricity prices right from September

The three powerful state owned economic groups, including the Vietnam Coal and Mining Industries (Vinacoal), PetroVietnam and the Electricity of Vietnam (EVN), have all proposed to raise the electricity prices as soon as possible in order to speed up the power projects.

Power generators once again claim for power price increases

The meeting on September 8 was scheduled for reviewing the implementation of the sixth power plant development strategy in 2006-2010. However, the meeting turned out to be a forum, where power groups claimed for power price increases.

Under the seventh power plant development strategy for the 2010-2015 period, PetroVietnam will provide 20-25 percent of the total electricity output, about 9000 MW. However, PetroVietnam’s Deputy General Director, Trinh Viet Thang, complained that the current electricity prices are not attractive enough to encourage investors to pour money into power projects.

“PetroVietnam, as a state owned group, needs to join the national strategy on ensuring energy security. However, as a business, PetroVietnam needs to make profit with its investment projects, which should be put on the top priority,” Thang said.

Therefore, Thang has called for the permission to raise the electricity price as soon as possible in order to facilitate the implementation of power projects.

Lacking capital has always been the biggest headache for power groups. Duong Quang Thanh, Deputy General Director of EVN, said that the economic group finds it very difficult to arrange capital for projects.

“We have set up a condition that the contractors only win the bids when they promise to successfully call for 85 percent of total investment capital from foreign sources,” he said.

In 2011-2015, EVN plans to put into operation 20 power projects which would provide 11,594 MW in electricity, and start the other 14 projects which are expected to provide more than 12,000 MW.

“EVN will need 520 trillion dong, but it has just found 247 trillion dong, while it still does not know where to find the other 277 trillion dong,” Thanh said.

A lot of power projects in the south are still pending due to the lack of capital, including the project on the 500 KV Pleiku-My Phuoc-Cau Bong, and the Duyen Hai 1 & 3 projects. As for the Vinh Tan 1, Vinh Tan 2, Duyen Hai 1 projects, it is still impossible to arrange capital, because EVN lacks reciprocal capital.

In 2010, EVN incurred the loss of 8500 billion dong, while the gross loss increased by 2 trillion dong by the end of August 2011. Since EVN continues incurring loss, it does not have money for re-investment. As a result, power projects cannot be completed as previously planned. EVN has warned that the current problems would lead to the electricity shortage in the south in 2013-2015.

Thanh has also proposed to raise the electricity prices right from September.

Power projects go at a snail’s pace because of lack of capital

Reviewing the implementation of the sixth power development strategy, Pham Manh Thang, General Director of the Energy General Department, said that most of the power generation projects have been late by 6 months-1 year. Especially, some projects have been late for 2-3 years, which has broken the development strategy.

In 2010, the implemented projects have just provided 73.4 percent of the planned total output capacity, while the figure would be lower, at 69.1 percent for the whole five-year period.

Worse results have been reported for the power transmission projects. Only 59 percent of the volume of works for building the 500KV transformer station has been implemented.

“All the 40 power generation projects and 10 power grid projects are facing difficulties in capital arrangement,” Thang said.

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