EVN Forced to Buy Chinese Power

Thanh Nien – January 18, 2013

In 2012, in spite of many thermal power plants working at 70-80 percent of capacity, Electricity of Vietnam (EVN) had to buy power from China. EVN forced to buy Chinese power.

According to Vietnam National Coal Mineral Industries Group (Vinacomin), the production and consumption of power plants belonging to this group in 2012 reached 6.3 billion kWh, equaling to 94 percent of 2011. Na Duong, Cao Ngan Son, Cam Pha thermal power plants had stable operations, but only used about 70 percent of designed capacity mainly due to declining demand.

Vu Huy Quang, general director of PetroVietnam Oil and Gas Group (PVN) stated that last year, the company’s thermal power plants only mobilised around 70 – 80 percent of capacity compared to the designed plan of the executive centre.

Dang Hoang An, EVN’s deputy general director said that currently, Vinacomin’s power plants has been running with full capacity. “The capacity cannot be the same; it depends on the time of the year. For example, in flood season, even EVN’s thermal power plants have to stop its operation while hydropower plants outside still run because of its lower prices ” said An.

In fact, these plants have not taken advantage of the maximum capacity because Vinacomin and PVN factories mainly use coal, gas, oil with higher prices than hydropower. Meanwhile, in 2012, EVN hydropower’s exploitation reached 52.96 billion kWh, exceeding 5.5 billion kWh. Thus, EVN has reduced the use of oil in thermal power plants (reduced 125 million kWh compared to the plan).

The huge mobilisation of hydropower at cheaper prices is one of the important reasons to bring the profit of 6 trillion dong in 2012. EVN’s power output reached 54.4 billion kWh, exceeded 3.58 billion kWh. The amount of power should be purchased from outside is approximately 63.19 billion kWh.

Although EVN has reduced thermal power output due to the domestic redundancy of electricity, the amount of power purchases from China is still high. In 2012, EVN did not specify the amount of imported electricity from China. However, according to the official figures, in the first seven months of 2012, EVN has bought 1.571 billion kWh of electricity from China.

On average, the number of imported electricity from China may be about 2.5 to 2.8 billion kWh or higher. This figure was accounted in a year of the power excess. As planned, in 2013, supply is expected to have certain stress due to unfavourable hydrology; EVN is expected to import 3.6 billion kWh of electricity from China.

It’s necessary to review the purchase structure

The Chinese power price has increased dramatically in recent years. Statistics of the Ministry of Industry and Trade showed that in 2011, Vietnam signed a contract to buy electricity from China at a price of 5.8 cents per kWh. In 2012, the price was 6.08 cents per kWh (equivalent to 1,300 dong per kWh). Meanwhile, electricity prices of small hydropower plants in the country are just about 800 – 900 dong per kWh (or even from 500 – 600 dong per kWh in flood season). Power price of thermal power plants was approximately 1,280 – 1,300 dong per kWh.

Due to the shortage of domestic power supply in the past few years, the decision of the maximum electricity imported from China has always been one of the major solutions to solve the problem of balancing supply and demand.

However, Vu Huy Quang said that this contract is a consequence of the limited domestic power supply. However, every year, domestic supply has been added more and more, so the power purchase from China at higher prices compared to hydropower and thermal power is a disadvantage.

According to Quang, the contract has the commitments on output. If EVN don’t buy enough, it will suffer from penalty. Therefore, in 2012, even the power supply was redundant, EVN still have to import electricity from China.

An expert in this field said that the power purchase contract with China had decided the output as well as prices at the beginning of the year. This makes not only the large thermal power plants, but also the small and medium-sized hydropower incur losses. With small and medium-sized hydropower plants of below 30 MW (which do not join the competitive electricity markets), whether they can be mobilised or not depends entirely on the EVN. Thus, EVN needs to consider the effectiveness of the long-term electricity import from China as well as restructure domestic purchasing power sources.


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