EVN to earn additional 6tr dong from 5pct electricity price hike

22-Dec-2011 Intellasia | Vietbiz24 | 7:01 AM Print This Post

Electricity of Vietnam (EVN) has said that electricity sector proposed the electricity price hike level of 11 percent. However, due to the target of taming inflation, the Vietnamese government allowed the electricity price hike at the lowest level of 5 percent. With this electricity price increase, EVN will earn additional only six trillion dong, a very modest figure, according to Dinh Quang Tri, EVN’s deputy general director, in a talk with the local newswire VnExpress.

“The increase can offset loss for only forestry environmental costs of about 700 billion dong and fuel costs in 2012. But the group’s loss of 10 trillion dong, EVN still cannot solve”, Tri said.

EVN’s leader said that the group is willing to talk with people to aware of the electricity price hike.

Economist Le Dang Danh said that, the electricity price increase of 5 percent is quite modest and much lower than initially expected. However, Danh also concerned, many other items will be also “escalating”, taking advantages of power price adjustment to push up prices. According to the economist, EVN should limit wastes such as wire losses and energy saving for the people to avoid suffering losses.

In its statement, EVN confirmed the electricity price adjustment is to ensure truly reflecting the electricity business and production costs and partially offset other costs incurred in 2010 due to unfavourable weather conditions and EVN had to use oil for electricity production with higher costs.

EVN said that the new electricity price will be the right signals to attract investments in power projects, encouraging the efficient power use and electricity saving.

EVN also gave the message to curb the abuse of power price adjustment to push up price of other goods and services inappropriately, affecting people’s lives and the country’s economic development.

Earlier, in an answer to the National Assembly, minister of finance, Vuong Dinh Hue, said EVN’s loss for electricity production and business alone in 2011 was estimated to be over 11 trillion dong. However, after the first nine months of this year, the group’s real loss from electricity production and business was only 680 billion dong. This year, the group has decreased 460 billion dong from materials and repairing costs for plants. Due to high costs of buying fuel for electricity production, so the group incurred an additional 2.655 trillion dong loss, plus 680 billion dong loss previously, EVN’s loss till the end of 2011 is estimated to be 3.54 trillion dong, excluding the forex rate difference. Thus, in comparison with its estimated loss plan of 11.705 trillion dong, this year EVN’s pressure from electricity price hike due to loss is much reduced.

The Vietnamese Ministry of Industry and Trade (MoIT) on December 16 allowed EVN to adjust up the electricity price by 5 percent compared to the current electricity price (1,242 dong/kWh). Accordingly, from December 20, the average electricity price will be 1,304 dong per kWh (excluding VAT-value added tax), up 62 dong per kWh from the current electricity price.

The progressive electricity price of 0-50 kWh for poor households and the progressive electricity price of from 0-100 kWh will not be temporarily adjusted.

Previously, under the Decision No 24 on adjusting the electricity price under the market mechanism issued by the prime minister, from June 1, 2011, if the input costs increase by 5 percent, EVN will be allowed to increase the electricity price by a corresponding level, after registering and getting approval from MoIT. If the costs increase over 5 percent, EVN needs to report to the ministry and send for Ministry of Finance (MoF)’s evaluation.


Category: Business

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