Firms to be Slammed by Power Hike

Companies will be hit hard by a planned robust power tariff hike in 2013.

Hoang Quoc Vuong, chairman of state-run Electricity of Vietnam (EVN), said that there would be another 7.2 per cent increase in power prices this year.

Hoang Quoc Vuong, chairman of state-run Electricity of Vietnam (EVN), said that there would be another 7.2 per cent increase in power prices this year.

EVN reported that the average power price for 2013 would be VND1,459 ($0.07) per kilowatt hour from 2012′s VND1,361 ($0.065) per kWh, which was up over 35 per cent against the previous year.

Vuong ascribed this year’s power price hike to “unfavourable conditions for EVN’s business and production” including expected shortages of water in hydropower plants’ reservoirs, which were tantamount to 1.43 billion kWh, due to weather reasons.

“Besides, there will be shortages of gas between July and September 2013 to operate thermal power plants providing electricity to the country’s southern region. Thus oil would be used to fuel those plants, whose total volume would be 1.8-2.4 billion kWh,” Vuong said. “In 2013, there will also be a hike in prices of coal and oil used for generating electricity. These factors will increase our power prices this year.”

EVN recorded the total revenue of VND143.42 billion ($6.89 billion) and VND6 trillion ($288.46 million) in profit in 2012. But, Vuong repeated that despite profit, “power prices will be increased due to increasing input costs.”

EVN’s new move has received complaints from enterprises and the public nationwide.

Nguyen Huu Su, general secretary of Hanoi Small- and Medium-sized Enterprises’ Association, told VIR such a 7 per cent increase would mean a “strong blow” to almost cash-strapped small- and medium-sized enterprises in Vietnam.

“The number of enterprises with bankruptcy and ceased operations in Hanoi in 2012 was innumerable due to sharp hikes in input production costs, including a 35per cent hike in power prices,” Su said. “Enterprises have been exhausted over the past two years. The power tariff increase will result in rises in prices of a series of goods and services.”

For example, he said, electricity occupied 8 per cent of production costs for a steel-maker. Manufacturing one tonne of steel would need 600kWh. And the 7 per cent electricity price hike would augment the steel price with an additional VND45,000 ($2.16) per tonne. If an enterprise monthly made 50,000 tonnes of steel, it had to pay additional VND2.25 billion ($108,180) for its electricity bill.

Doan Van Cuong, vice general director of Vicem Hoang Mai Cement Joint Stock Company said his company would have to pay additional VND15 billion ($721,150) for power bills to produce 1.5 million tonnes of cement in 2013 if the targeted power price hike was introduced by EVN.

Do Xuan Doanh, head of Trung ward in Hanoi’s Xuan Dinh commune, said his ward’s 7,000 households monthly had to pay about VND4 billion ($192,300) for power bills.

“Thus we will have to pay additional several hundreds of millions of dong due to the planned power price hike. This makes people’s lives become more difficult,” Doanh said.

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