Proposal for the State to spend 130,000 billion VND to help EVN cut losses

Proposal to keep electricity price at price stabilization level

Reporting on the acceptance of the draft revised Law on Prices at the meeting this afternoon, May 23, of the 5th session of the 15th National Assembly , Chairman of the Finance and Budget Committee Le Quang Manh said that regarding the list of price-stabilized goods, the National Assembly Standing Committee proposed to remove electricity from the price stabilization list.

Delegate Nguyen Quoc Luan expressed his opinion at the meeting.

According to Mr. Manh, this item is currently on the list of goods priced by the State (including retail and wholesale prices as well as at the stages of distribution and transmission...).

Pricing and price adjustment are decided by competent State agencies, so they cover the goals of price stability, impact on people's lives, businesses as well as business plans of electricity enterprises.

In the discussion that followed, delegate Nguyen Quoc Luan, Deputy Head of the Yen Bai National Assembly Delegation, presented the draft law stipulating a list of 10 types of goods and services subject to price stabilization, but electricity prices were not included. Electricity prices are specified in the list of goods priced by the State. The Yen Bai delegation proposed adding electricity prices to the list of goods requiring price stabilization.

"These are important goods and services directly related to people's lives, related to production and business activities of organizations and enterprises, having a great impact on the socio-economy, production, business and people's lives," Mr. Luan analyzed.

Delegate Luan also said that in reality, prices change frequently in the direction of only increasing and not decreasing, but the increase in electricity prices is still not enough to cover costs, leading to large losses in the electricity industry, causing cash flow imbalance, leading to many serious consequences. For this reason, according to Delegate Luan, electricity products need to be stabilized by state management agencies and included in the price stabilization list.

Sharing the same view, delegate Pham Van Hoa (Dong Thap delegation) raised concerns: "Some people use gasoline and oil, some don't, but we still stabilize prices. But 100% of people use electricity, so why not put it on the price stabilization list?"

From there, delegate Hoa suggested that if electricity is brought back to the price stabilization level, people will welcome it.

The government regulates electricity prices "without spending a single penny"

Also related to electricity prices, delegate Nguyen Thien Nhan said that currently, the State regulates electricity prices in Vietnam by "administrative orders" and "the State does not spend a single penny".

Delegate Nguyen Thien Nhan expressed his opinion at the meeting.

According to him, the State's price regulation without supporting businesses or directly supporting people like other countries are doing now has pushed EVN into losses.

Total loss from electricity production in the three years 2021 - 2023 is expected to be more than 100,000 billion VND, equivalent to 49% of charter capital. In addition, the group owes its customers 19,700 billion VND due but has no money to pay.

According to Mr. Nhan, by 2024, if the electricity price does not increase, the total accumulated loss over 4 years is expected to be around VND112,000 - 144,000 billion, which means losing 54 - 70% of EVN's charter capital. If the electricity price increases by 3% in 2024, the expected loss is from VND94,000 - 126,000 billion, which means losing 46 - 61% of equity.

Mr. Nhan said that in 2022, the total unused public investment capital is nearly 130,000 billion VND. If the budget approved by the National Assembly is used but not used to cut losses caused by the State's price regulation method, EVN will move to a new stage of development.

From there, Mr. Nhan proposed that the revised Law on Prices add the principle of State price regulation management to the draft, which is that the State must have public financial resources and reserve goods suitable for price regulation.

This will help EVN - the largest state-owned corporation in Vietnam in 2024 - not go bankrupt but develop sustainably, according to Mr. Nhan.

Minister of Finance Ho Duc Phoc said the Government would not accept the proposals of the delegates.

Explaining this issue, Minister of Finance Ho Duc Phoc said that electricity prices have now been put under the State's price determination, so they will no longer be stabilized. According to Mr. Phoc, the price determination will benefit consumers, which means it will benefit the people.

Mr. Phoc said there are many reasons. First, the current budget is still limited. Electricity production enterprises, currently mainly EVN, are state-owned corporations accounting for over 50%. Second, if support is provided by the budget, the Budget Law must be amended to be appropriate. "Therefore, we do not accept this opinion," Mr. Phoc said.

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