Big hole
The State Capital Management Committee at Enterprises has just reported to the Ministry of Planning and Investment on the production, business and investment development situation of enterprises whose owners this agency represents.
In this report, the Capital Management Committee said: The loss in the first 6 months of 2023 of Vietnam Electricity Group (EVN) is more than 35,400 billion VND. In the first 8 months of 2023, EVN's loss is expected to be more than 28,700 billion VND.
In 2022, EVN lost VND 26,500 billion, excluding exchange rate differences.
Thus, calculating the total loss in 2022 and the first 8 months of 2023, the parent company EVN has lost a total of about 55,000 billion VND.
In early 2023, EVN calculated the financial situation for 2023 with the group's financial forecast being much more gloomy than 2022. According to those calculations, in 2023, EVN's parent company, power corporations and the National Power Transmission Corporation expected to lose about VND 64,941 billion in production and business if the retail electricity price remained the same as current (VND 1,854.44/kWh).
Of which, in the first 6 months of the year, EVN is expected to lose 44,099 billion VND and in the last 6 months, it is expected to lose 20,842 billion VND.
The increase in electricity price from May 4 to VND 1,920.3732/kWh helps EVN earn an additional VND 8,000 billion. However, EVN representative affirmed that: Compared to the huge financial difficulties in 2022 and 2023 due to the high price of input fuel for electricity production, this increase in revenue only partially offsets EVN's financial difficulties in 2023. It is expected that EVN's electricity production and business activities will continue to face many difficulties and financial imbalances.
"With the Government 's current retail electricity price regulation mechanism, the revenue calculated based on the regulated retail electricity price is not enough for EVN to cover costs," EVN's report at the July 2023 electricity price workshop stated.
At the meeting of the Government Standing Committee working with State-owned enterprises on September 14, Chairman of the EVN Board of Members Dang Hoang An said that EVN is focusing on implementing many internal solutions such as: optimizing costs, optimizing resource mobilization, cutting unnecessary costs to reduce financial difficulties. EVN hopes to gradually balance its finances in the coming time.
Again, the story of adjusting electricity prices according to market mechanisms
When looking at EVN's losses, Mr. Nguyen Tien Thoa, Chairman of the Vietnam Valuation Association, said: Currently, any type of goods or services operating under market mechanisms, with prices determined by the market, businesses producing and trading those goods must accept "profit and loss".
But Mr. Thoa noted that electricity prices are a different story. "Electricity prices are decided by the State. The recent electricity prices have been operated according to policies to serve the goal of stabilizing the macro economy , controlling inflation, and having the lowest impact on production and life, so they must be handled in the direction of "inputs for production to form electricity prices are market-based but outputs are non-market-based," Mr. Thoa said.
This person cited that in 2022, the audited cost of electricity production and business increased by 9.27% but the price was only adjusted to increase by 3%. Thus, the decision to adjust the price lower than the cost incurred by the State will inevitably cause negative cash flow.
Therefore, adjusting electricity prices "according to market mechanisms" was something the Ministry of Industry and Trade set out when drafting the revised Electricity Law, especially in the context of the plan to transfer the National Power System Dispatch Center to the Ministry of Industry and Trade.
The policy orientation of the Ministry of Industry and Trade is that it is necessary to study and amend regulations on electricity price policies in the direction of implementing them publicly, transparently, and without discrimination between electricity units; moving towards eliminating cross-subsidy of electricity prices between customer groups, between regions; ensuring that electricity prices accurately reflect the cost of supplying electricity to electricity users...
Mr. Nguyen Xuan Thanh, Fulbright School of Public Policy and Management (Fulbright University Vietnam) in his speech at the Vietnam Socio-Economic Forum on September 19 emphasized that "a policy priority" when there is more participation of renewable energy sources in the power system is to set the electricity price equal to the cost of new production, especially if the new supply is more expensive than the average cost and current electricity price.
If the cost of renewable energy is 5-7 cents/kWh plus transmission, the required retail price would be around 10-12 cents/kWh, including distribution and retail costs.
"Of course, increasing electricity prices will lead to negative reactions in society, but there will be no green transformation, it is impossible to develop renewable energy without a roadmap to increase electricity prices at a level attractive enough for investment," said Mr. Nguyen Xuan Thanh.
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