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EVN denies monopoly of power market while seeking investment

Update: July, 21/2012 - 10:17

HA NOI –— Electricity of Viet Nam (EVN) claims it does not want to monopolise the power market and has called for investment from other companies.

To make its point, it said that electricity tariffs had not caught up with market realities, making it difficult to ensure there was enough money for production.

EVN's deputy general Dinh Quang Tri revealed this at a press conference to discuss electricity prices in Ha Noi yesterday.

Tri said EVN expected that revised circulars would be announced in the future to guarantee a mechanism existed to amend tariffs and ensure that the moves were transparent.

"The newly issued Law on Price stipulates that the Government regulates the framework for electricity generation. Electricity prices will be decided according to market mechanisms," he said.

He said that the group had found it difficult to find finance for power production. However, the dilemma was that if electricity prices were high, the economy and people would not be able to suffer.

"EVN cannot decide itself on raising power prices, but depends on instructions from ministries," he said in response to a question on a price hike earlier this month.

He added that EVN would review input costs every three months to submit to the Prime Minister whether or not prices were raised.

The group would only be providing 15 to 17 per cent of its output to the national grid by 2015, the rest would be supplied from other power companies.

EVN's main duty would be to buy and sell electricity to distribution companies to provide to consumers. It would also be responsible for arranging capital for transmission companies to buy electricity.

The deputy general director said the group would add VND6.5 trillion (US$309.5 million) into electricity prices each year from 2012-15 following the PM's requirement that compensation be paid for foreign exchange differences.

In the period of 2010, EVN imported oil for power generation and suffered a loss of VND15 trillion ($714.2 million) due to foreign exchange differences. In 2011, the loss was VND11 trillion.

He said the compensation was necessary because other groups such as Petrolimex could sell fuel according to market prices, while the power industry had to rely on those stipulated by the Government.

"The Government arranged $74 billion in loans for us to invest in power production. This will be transferred gradually into electricity prices," he said.

He said power price hikes would depend on economic and EVN's financial situation. Increases would be audited every year.

In responding to question on a possible decrease of electricity prices, he said the group had suffered losses and could not do this at present.

Following the PM's requirement to implement restructuring, he said EVN would bring three power generation companies (GENCO) into operation by the beginning of October. The companies would sell electricity to EVN.

Initially, EVN would arrange capital for the companies. GENCOs would be equitised and separated from EVN as the competitive wholesale power market come into operation by 2015.

He added that all investment in its power plants were loans, including 85 per cent from foreign financial institutions and 15 per cent from domestic commercial banks. — VNS

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