Vietnam - Electricity price in 2012 will not cover all EVN’s losses

VietNamNet Bridge – Minister of Finance Vuong Dinh Hue said in the question and answer session on the afternoon of November 24 that the production cost of electricity may rise 4.6 percent in 2012. However, the selling price will not include the entire losses of the Electricity of Vietnam (EVN) Group.

Loss-making state-owned power group pays high wage 


Thirteen deputies raised questions to the Finance Minister, mainly focusing on the power price, petrol price, solutions to assist enterprises, government debt, etc. Earlier, five others sent their written questions to Hue.

Before answering questions, Hue reminded that the prices of electricity, petrol, coal, public services and other essential goods are managed under the market mechanism, with the state management. 

Under the market mechanism, the prices of these goods are not subsidized by the state. However, the power prices offered for some industries like cement and steel are subsidized, which is estimated at VND2.547 trillion ($121.3 million) for steel production alone. 

Hue said last year the EVN incurred losses of VND8.04 trillion ($402 million) owing to purchase electricity at high prices from independent power producers and VND15 trillion ($750 million) due to exchange rate gap.

The Finance Minister said the production cost of power for 2012 is estimated at around VND1,242 per kWh, up 4.6 percent over the current price. The new price does not cover all EVN’s losses, but only one fourth of the group’s losses in 2010 and one third of the losses caused by purchasing power from independent producers.

Hue said the power price in 2012 will increase, but at controlled rate. The power price for low-income earners will be maintained as the current level. He said that the government is very cautious in fixing the power price because the real price is very high.

The Minister confirmed that EVN’s VND2.1 trillion ($105 million) of investment capital in non-power areas has no relation to its VND8.04 billion of losses.

Deputy Prime Minister Hoang Trung Hai joined Hue to answer deputies. Hai said that Vietnam’s average power price is 5.6 cents while the real price must be 9.6 cents.

In managing the petrol price in the coming time, Hue said the petrol price will be adjusted under the market mechanism, with state management. Petrol companies’ operations will be inspected and audited in a transparent manner.

He said that the Ministry is designing a plan on tax reduction and exemption for businesses in 2012. The plan will be submitted to the government in December 2011.

Some deputies expressed their concerns over the impact of the crisis of public debt in the world on Vietnam. Hue confirmed: “We is not inattentive at government debt just a second”.

By December 31, 2010, Vietnam’s public debt was equivalent to around 57.3 percent of GDP. By December 31, 2011, it is estimated at 58.4 percent of GDP and it is still under the safe threshold.

Hue noted that in the government’s foreign debt, commercial loans account for only 7 percent so the pressure is not heavy.

PV


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