Electric bill to hike to help EVN cover losses

November 21, 2011

Raising the electric bill is the only way to help the Electricity of Vietnam Group (EVN) to cover its losses amounting to some VND10.126 trillion ($483.9 million) in 2010, said a state official.

“The hike should have been materialized sooner,” said Hoang Nhat Vuong, Minister of Industry and Trade, adding that the wait for the state-run power monopoly’s audit sheet release has caused the delay.

“The details about the time and price for the new electric bills cannot be unveiled now,” he told Tuoi Tre.

EVN raked in VND90.934 trillion from selling electricity last year, but its total costs exceeded over VND101 trillion, including VND78 trillion and VND16 trillion for power generation and transmission.

The dong devaluation alone caused a loss of VND15 trillion in 2010.

EVN’s assets formed only 30 percent of its total equity, while 70 percent are made up by foreign loans in US dollars, Japanese yen and euro from Asian Development Bank, World Bank, and Northern European credit institutions, said Pham Le Thanh, general director of EVN

“We are buying high-price electricity, but sell it at lower price, and so, we suffer the losses,” he said.

“The losses from other sectors, including telecom and financial investment, are excluded,” he added.

“We suffered a loss of VND10 trillion from using oil to generate power last year,” Thanh said.

EVN owed a debt worth VND11 trillion to power generation facilities under the Vietnam Oil and Gas Group (PetroVietnam) and Vietnam Coal and Minerals industries Group (Vinacomin) for coals used for thermo power plants last year.

EVN had to subsidize customers VND300 per every kilowatt hour we sell last year, and the rate surged to VND300,000 for end-users whose monthly electric bill passing VND1 million mark, he added.

But the industry-trade minister said the rate stood at VND100 for the year 2010, and it tripled to VND300 this year only.

Since there have been seven levels to calculate the power bills, not all the end-users enjoy the subsidies, he said.

For those who used up to 130 kWh a month, EVN did not have to spare any penny for subsidies, he added.

Regarding the fact that the electric bill rose 9 percent rather than 6.9 percent as pledged last year, the industry-trade minister said the difference was just the period of time used for calculation.

The former rate was calculated from March 1, 2009 to December 31, 2010, while the latter rate was figured from January 1, 2010 to December 31, 2010.

Concerning the fact that the public had raised the question over high income of the power sector’s employees, the EVN chief said the average monthly wage of EVN’s employees in 2009 was VND7.3 million, and fell by 5 percent in 2010.

“This rate is adequate for those living in rural areas, but is not enough to cover the costs of living for those who have a family to look after in urban areas,” he added.

Regulations for competitive power market scheme drafted

The Ministry of Industry and Trade has completed a draft circular to regulate the competitive power market including responsibility for all players.

The circular will be applied to all licensed power plants with the capacity of over 30 megawatts and connected to the national grid must join the market, excluding build-operate-transfer (BOT), wind power and geothermal power ones, those under industrial parks selling only part of their output to the grid or without a long-term selling schedule.

The players will include companies that buy and sell electricity, generate electricity, operate an electricity system, transmit electricity and manage electricity usage.

Hydropower plants will offer prices starting from VND0 per kilowatt defined by weekly water prices.

Thermo power plants will be defined by factors like specific consumption, fuel prices and startup costs, starting from VND1 per kilowatt.

But the ceiling power price of the market is raised to VND1,400 per kilowatt given the ministry’s regulation.

The ministry also asks the qualified power plants to apply to join the market and investors have the responsibility to complete an equipment system for connection, information and measurement system.

The market is now under a trial run with 48 out of 73 plants taking part and the government asks them to offer prices to the only buyer Vietnam Electricity Group (EVN).

For payment, 95 percent of the electricity is paid as provided in the contract between power plants and the electricity trading company and the remaining 5 percent is paid according to the hourly market price.

Learning from the pilot model, power plants will be suspended from joining the market if they provide false information in operation schedules and turbine mobilization, deal with others before offering prices to increase market prices and affect power security.

Source: http://www.tuoitrenews.vn/cmlink/tuoitrenews/business/electric-bill-to-hike-to-help-evn-cover-losses-1.51889

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