VietNamNet Bridge – It is expected that the electricity price needs to be raised by 40 percent by the end of 2015 in order to offset the losses the Electricity of Vietnam (EVN) incurs when it has to sell electricity at the prices lower than the production costs.



After raising the electricity price by five percent, EVN has reportedly collected an additional sum of VND3 trillion (after paying for expenses). The power group has got the nod from the Prime Minister to raise the retail prices continuously from now to 2015 in order to offset the loss of VND26.6 trillion dong caused by the dong/dollar exchange rate fluctuations.

As such, by the end of 2015, the electricity price needs to increase by 40 percent more in order to cover all the losses.

40 percent increase more by 2015?

According to Dinh Quang Tri, Deputy General Director of EVN, the power group plans to collect VND7 trillion dong after the five percent power increase on December 22, 2012.

Of this amount, VND900 billion would be used to cover the additional expenses for coal which have increased by VND900 billion dong due to the coal price increase. Besides, VND3.8 trillion dong would be spent for the higher-than-expected gas volume used, and the remaining VND3 trillion to cover the exchange rate fluctuations.

The sum of VND3 trillion proves to be too small if compared with the total loss of VND26.6 trillion incurred by EVN due to the exchange rate fluctuations. If noting that EVN still needs VND23.6 trillion more to cover the loss, EVN would need to raise the retail electricity price eight times more (five percent each time) by 40 percent in total to get enough money to offset the above said loss.

However, the electricity price may even be higher, because the electricity production still depends on the weather, i.e. on the rainfall. Meanwhile, Pham Le Thanh, General Director of EVN, has forecast that the electricity supply in the south in 2013 may be short, because of which EVN would have to buy oil to generate power in the dry season.

If this happens, EVN would incur the loss of VND6 trillion in 2013 when it has to buy oil to generate 2 billion kwh of electricity.

Meanwhile, Hoang Quoc Vuong, Chair of EVN, said the Vietnam Coal and Mineral Industries Group (Vinacoal) in 2013 has proposed to raise the prices of coal to be sold to power generators.

This means that power generators would have to pay higher for the input costs. EVN, for example, would have to pay VND6 trillion more for coal in 2013, while the figure would be VND16 trillion in 2014 and VND21 trillion in 2015.

When asked how high the electricity price would be in 2013 and the next years, Thanh of EVN said he cannot give the answer to the question right now, because EVN still needs to consider the production costs and the situation of the national economy to make final decisions.

Electricity price may become unbearable

Meanwhile, Vuong simply said EVN needs to make profit in 2013. The words are understood that the electricity price would be raised further in the year.

With the latest electricity price increase of five percent decided in late 2012, the average retail price has increased to VND1,506 per kwh, or 7.2 cent.

According to Deputy Prime Minister Hoang Trung Hai, the current electricity price, though still being lower than that in some regional countries, is no longer cheap.

However, this is just the average electricity price, while in fact, families have to pay VND4000-5000 per kwh.

Tien Phong