Electricity prices increased by 3% from May, but EVN Deputy General Director Nguyen Xuan Nam said that it only reduced part of the cash flow, while finances continued to be difficult.
At the seminar on state capital management in enterprises on September 26, Mr. Nguyen Xuan Nam, Deputy General Director of Vietnam Electricity Group (EVN), said that the group is facing many difficulties in electricity prices and supply.
According to him, in addition to economic tasks and profit and loss accounting, EVN is also assigned the task of ensuring social security and supplying electricity for socio-economic development needs, including remote areas and islands. In these areas, the Deputy General Director of EVN said, the cost of electricity production and business can be up to 7,000 VND per kWh, but the retail price of electricity is only 1,900 VND per kWh.
"In the context of ensuring social security being the top priority, EVN must accept a selling price lower than the cost price," he said.
But this also puts the "big guy" in the electricity industry in financial difficulty, when the price of fuel for electricity production (oil, coal, gasoline) increases dramatically. For example, last year the price of coal reached 400 USD per ton at one point, 5 times higher than in 2021. While this item accounts for 84% of the cost of electricity production and the proportion of thermal power sources accounts for more than 50% of the cost of the electricity industry. EVN lost more than 26,200 billion VND last year.
2022 is considered by EVN's boss to be the most difficult year for the business. This year, electricity prices increased by 3% from May, but EVN's Deputy General Director said that it only reduced part of the cash flow, while finances continued to be difficult.
Mr. Nguyen Xuan Nam, Deputy General Director of EVN, spoke at a seminar on state capital management in enterprises on September 26. Photo: Hoang Phong
A recent report from the Ministry of Planning and Investment said that in the first half of this year, the "big guy" in the electricity industry recorded a loss of about 35,400 billion VND, but by August this loss had decreased to 28,700 billion VND.
Fuel prices for electricity production have cooled down this year, but remain high. Currently, each ton of coal is at $180-220, 40-50% higher than the 2021 price threshold. Oil prices have risen sharply to $93 a barrel, one and a half times higher than before. This has increased the cost of electricity production, pushing up the price of purchased electricity and causing financial difficulties for EVN.
Sharing, Mr. Nguyen Duc Kien, former Head of the Prime Minister 's Economic Advisory Group, commented that EVN buys input electricity at market prices, but sells it at prices set by the Government and relevant agencies. In addition, the group also faces the risk of exchange rate differences. For example, previously, 1 USD borrowed to invest in developing the power grid and infrastructure was equivalent to 16,000 USD, but now it is 24,000 VND to 1 USD, an increase of nearly 40%. EVN must bear this exchange rate difference.
To ease financial difficulties for EVN, in the draft decision amending Decision 24/2017 on the mechanism for adjusting average retail electricity prices, the Ministry of Industry and Trade proposed to add to the electricity price items such as exchange rate differences and production and business losses when calculating retail electricity prices. The adjustment of the formula for calculating average electricity prices, according to the Ministry of Industry and Trade, clarifies the factors related to the cost of electricity production and business.
According to experts, allocating items not included in electricity prices is reasonable, but authorities need to provide a roadmap to avoid shocking price increases that affect the lives and businesses of businesses and people.
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