Mar 17, 2013

Vietnam - EVN too lazy to generate electricity

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VietNamNet Bridge – The Electricity of Vietnam (EVN), the only electricity distributor, complains that the input production costs have increased since power plants have to run on FO and DO in the dry season. The complaint may be the warning on a possible new electricity price increase.

Vietnam will lack electricity in dry season, again?

While EVN warns that Vietnam may lack electricity in the dry season, March, April, May and June, the Ministry of Industry and Trade (MOIT) has calmed down the public, affirming that the shortage will not occur.

According to EVN, the electricity additional charge in March may reach 355 million kwh per day. Meanwhile, the water levels at hydropower plant reservoirs are still lower than the normal levels, especially in the central region and Central Highlands.

A senior executive of EVN said though hydropower plants began storing water very early, they still lack 5.297 billion cubic meters of water to generate electricity, including 1.9 billion cubic meters in the north and 2.623 billion cubic meters in the central region.

The senior executive also said that the short supply may occur in the south, since no new power generator would be put into operation in 2013. Therefore, EVN would have to mobilize some 1.113 billion kwh from FO and DO oil-run power plants in the dry season, which have higher production costs than that of hydropower plants or coal-run power plants.

In principle, EVN always prioritizes to mobilize electricity from hydropower plants, which are believed to be the cheapest, and from coal-run and gas-turbine power plants, before it has to use the electricity from FO and DO-run plants.

Meanwhile, Dang Huy Cuong, a senior official of the Ministry of Industry and Trade, said basically, power plants would provide sufficient electricity to satisfy the demand in the dry season, though he said the power supply may be short if severe droughts occur.

Also according to Cuong, the electricity output in 2013 is expected to increase by 11 percent in comparison with 2012. It is estimated that 64.1 billion kwh would be consumed in the dry season, up by 10.58 percent.

He also confirmed that EVN would have to offset the electricity output decrease by running power plants with FO and DO, which take VND4,000-5,000 to generate one kwh of electricity, thus pushing the production costs up.

EVN too lazy to generate power?

In general, the demand for electricity would be very high in the months from March to June, when it’s sunny and hot in both the south and the north.

An economist, who predicted that EVN would reason the current difficulties to raise the retail electricity price, said EVN has been very lazy to generate power.

“The electricity output generated by EVN tends to decrease sharply, which means that EVN has to buy electricity from non-EVN sources at high prices to sell to businesses and households,” the economist said. Non-EVN power plants sell electricity at higher prices that EVN’s power plants, since EVN’s plants have been operating long enough to have the depreciation period finished.

Analysts have also warned that the electricity price would increase further, sooner or later, once the coal price increases. At present, EVN can buy coal at low price (just equal to 70 percent of the coal production cost). And once Vinacoal, the only coal supplier, gets the nod from the government to raise the coal price, the electricity price would increase accordingly.

Tien Phong

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