VietNamNet Bridge – While enterprises in nearly all business fields of the national economy have gone bankrupted or reported losses, hydropower plants have reported big profits. This explains why investors rush to inject money in hydropower plants.

The third quarter finance reports of the listed hydropower companies showed the increase of 27 percent in turnover and 44 percent in pretax profit – the business performance that any other enterprises would envy for. Especially, some of them have reported the profit which was three times higher than that in 2011.

Nguyen Binh Khanh, an auditor of KPMG Vietnam, said all the 10 hydropower companies listing their shares on the Hanoi and HCM City bourses all have made big profit.

The report submitted by TMC to the HCM City Stock Exchange showed that in the first nine months of 2012, the company made a post tax profit of VND97.7 billion dong, an increase of 303.5 percent over the same period of the last year.

The sharp increase in the third quarter’s profit has been attributed to the higher electricity prices in the third quarter. Besides, the merchandise electricity volume increase of 65 percent has also helped increase the turnover and profit.

The same explanation has been given by all the 10 hydropower companies. TBC led the 10 companies in terms of the turnover growth rate. Meanwhile, SBA has been found as having the revenue decrease most sharply in the third quarter.

Some analysts have pointed out that one of the factors that helps hydropower plants make fat profits was the very low cost price. If the plants had not have to borrow bank loans at high interest rates, their profits would have been higher.

While the cost price of hydropower plants just accounted for a very small proportion of the total production cost, the profits from goods and services were equal to 100 percent or 200 percent of the cost prices.

SBC is an example. The finance report of the company showed it got VND201.642 billion from electricity sale, while the cost price was VND74.664 billion dong, which means the profit of VND127 billion, or 170 percent.

However, since the company had to pay VND72 billion dong in bank loan interests and suffered the loss of VND14.4 billion dong from the dong/dollar exchange rate fluctuations and paid other expenses, the post tax profit of the company was VND32 billion dong only.

Similarly, with the low capital cost, RHC II had the profit rate of 190 percent, SHP 138 percent and HJS 80 percent.

The fat profits partially explain why a lot of investors now want to pour money into hydropower plants, even though they have been facing the strong opposition from environmentalists and scientists, who try to prove that hydropower plants bring more harm than good.

Meanwhile, economists have pointed out that the economic efficiency of hydropower plants is not big as thought. Especially, a lot of investors have reported big losses due to the lack of capital and high bank loan interests. Meanwhile, the operation of other hydropower plants has been depending on the weather.

In fact, hydropower plants always require big investments and take a long time to take back the investment capital. Especially, it is really a big worry that the electricity would not be sold if the Electricity of Vietnam refuses to buy.

Economists have estimated that the investment in hydropower plants in particular and in power sector in general should account for 10 percent of the total investment capital of the national economy, and 30 percent of the investment capital of all the industries.

DDDN