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Price hike to ensure electricity supply (19/8)
19/08/2013 - 16 Lượt xem
Sharp increase in electricity production costs
According
to the Electricity of Vietnam (EVN), the adjustment was aimed to partly
offset increased power generation costs caused by the price hike in
coal and gas, especially the 37-41 percent coal price rise on April 20,
2013.
It
is estimated that in 2013, the EVN will increase revenue from this
adjustment by VND3.6 trillion. However the added costs of power
generation by coal and gas would reach over VND6 trillion, plus the
EVN’s remaining loss of VND23 trillion, would result in major financial
difficulties for the group.
According
to the MOIT, based on the prediction for commercial electricity output
in 2013, the five percent surge of electricity price would have a 0.123
percent increase on the Consumer Price Index (CPI). More specifically,
production sectors will be charged an additional VND1.8 trillion, while
state administrative agencies will be charged by VND146 billion and
business and service sectors some VND326 billion. Poor and low-income
households that use 0 to 50 kWh per month will be charged the same
amount as before but households that use 100-400 kWh per month will be
charged an additional VND6,800 to VND37,200 per month.
| According to Decision 854/QD-TTg on approving the five year business development plan and investment of the EVN during the 2011 - 2015 period, a roadmap for the power price hikes must have a suitable calculation; gradually increase electricity prices and from 2013 drive average electricity prices based on the market price. By 2015, the EVN’s finances will meet the requirements of credit institutions. |
Ensuring borrowing conditions
According
to the National Power Development Plan 7, from now to 2030, each year
5,000MW of new electricity source will be put into operation. Power
stations and grids will also be built with a total capital of about US$5
billion (now to 2020) and about US$60 billion (2020 to 2030).
Therefore, if the EVN continues to suffer losses as it did in 2010 and
2011, it will be difficult for the group to access bank loans for the
implementation of power projects.
It’s
time for electricity businesses to adapt to the market’s adjustment. In
the circumstance when fossil fuels are becoming exhausted, the resource
from hydroelectric plants has run out and import of fuels is getting
more difficult, Vietnam is heading towards investment in recycled and
nuclear energy to ensure electricity supply and a sustainable
development. By that time, electricity prices will surely continue to be
adjusted as it will take a large sum of capital for investment in wind
and solar power. The National Power Development Plan No 7 estimated that
the electricity price in Vietnam would reach 8-9 cent/kWh by 2020.
Chairman
of the Vietnam Energy Association Tran Viet Ngai said that building a
suitable roadmap for the power price hike was necessary to improve the
EVN’s finances. Electricity prices should fully reflect input costs and
the power industry must earn a certain profit so that it can borrow
capital from credit institutions or meet conditions to issue business
bonds. Only then can it ensure electricity supply and re-investment in
electricity production in the future.
However,
the input costs in the power industry’s production and trading
activities need to be strictly controlled to help ensure greater energy
efficiency and lower the pressure for electricity price hikes.
At
a recent monthly press conference on July 30, Minister-Chairman of the
Government Office Vu Duc Dam said that higher power prices were expected
to attract investors to join the power industry.
No other choice
The
public opinion is still wondering why the power industry raise its
prices and make consumers compensate for its losses. However, few people
know that losses of the power industry was due to its lower sale prices
compared with the cost prices and have never approached the market
prices. In addition, the losses was attributed to the slippage in
exchange rates. The industry had to generate electricity by running high
price oil or purchase electricity at high prices and sell at lower
prices to stabilize the macro-economy according to the government’s
directions.
It’s
obvious that in a bid to drive electricity prices based on the market
price, when input costs rise, the output costs must rise too. The matter
is consumers never expect price hikes, especially Vietnamese have got
accustomed to utilize products subsidized by the government. Low
electricity prices are an important base to attract foreign investors to
Vietnam, except for investment in the power industry. According to the
National Power Development Plan No 7, Vietnam will need about US$50
billion from now to 2020 to develop the power sources and grid systems.
The ethnic groups and rural residents are beneficiaries of the state’s
guidelines and policies and the power industry only realizes those
policies. If not, people in remote areas will never know when
electricity will come to their homes.
Allowing
electricity price hikes, the Vietnamese government had to give careful
considerations to consequences relating to the economic growth and
social issues based on scientific calculations to harmonize benefits of
the state, the businesses and people./.
Source: VEN
Source: VEN
