HA NOI — Electricity of Viet Nam has targeted reducing its production costs by VND1.8 trillion (US$85.7 million) this year.
The cost cutting measure was included in an agreement which was sealed yesterday morning between the EVN General Director and leaders of its member enterprises. The agreement also embraces their efforts to save electricity and reduce power losses.
Addressing the signing ceremony, Finance Minister Vuong Dinh Hue said this was a measure to reduce price acceleration pressures.
The Government was determined to manage prices according to the market, he explained. Electricity prices would continue to rise to make up for production costs because the Government could not offer subsidies forever.
A 5-per-cent rise in electricity prices would push the CPI (consumer price index) up by 0.37 per cent, he added.
"With this action, EVN is sharing difficulties with the Government and the business community," he said.
The primary method that EVN intends to use to decrease production costs is to save the amount of electricity that is consumed by 1 per cent, equivalent to 1 billion kWh. This change will reduce costs by VND1.3 trillion ($62 million).
EVN's member enterprises will have to co-operate with local authorities to persuade households and businesses to save power. They will continue encouraging people to use compact light bulbs and electric appliances with "energy saving" labels.
Users of solar-powered devices to boil water will receive VND1 million ($47) in support from the corporation. About 30,000 devices are estimated to be in use.
The Finance Minister also urged the sector to cut its own expenses because the VND1.3 trillion in savings would depend heavily on how much energy households consumed.
EVN's expenses on materials, services, stationery, seminars and others items will therefore be lowered by 5 per cent. The corporation also plans to cut electricity by 0.2 per cent for production, transmission and distribution.
To meet the target, EVN asked its member enterprises to prepare electricity provision projects for this year, including safely operating the North-South 500kV national grid, putting new turbines into operation and completing key electric transmission and distribution works as scheduled.
Improving the grid network in rural areas to reduce power losses by 5 per cent to 15 per cent is another measure.
In terms of investment, EVN will only allocate capital to projects which will be completed for use in 2012 and which are able to start within the year.
Selling bank stake
EVN yesterday said it would sell 5.3 per cent of its holdings at An Binh Commercial Joint Stock Bank (ABBank) to HDBank as a part of a restructuring plan to focus on its core business.
The move follows the country's largest electricity producer's plan announced last December to reduce its stakes at ABBank from currently 25 per cent to 20 per cent.
"EVN has submitted to the State Bank of Viet Nam a decision to sell 5.3 per cent of its stakes in ABBank to HDBank," said EVN General Director Pham Le Thanh.
The announcement was made during an EVN's event on electricity and production cost saving held yesterday in Ha Noi.
Thanh said EVN would now focus on electricity production and distribution and gradually withdraw from non-core sectors.
The company, which invested VND114.9 billion ($5.5 million) in ABBank and VND1 trillion ($47.6 million) in EVN Finance, is estimated to invest more than VND2.1 trillion ($100 million) in non-core businesses (banks, insurance, real estate), accounting for 4.22 per cent of the firm's total investments.
ABBank is now among the 10 biggest joint-stock banks in Viet Nam by market capitalisation. The bank currently has foreign shareholders such as International Finance Corporation (10 per cent) and Maybank (20 per cent).
EVN last month transferred EVN Telecom, its struggling telecommunications branch, to military-run mobile carrier Viettel. — VNS