EVN workers on a transmission station. The average retail price of electricity in 2023 is VNĐ1,864/kWh, which has not been revised since 2019. — VNA/VNS Photo Huy Hùng

HÀ NỘI — The Electricity of Vietnam (EVN) has once again proposed to increase electricity prices to combat enormous losses, which may reach more than VNĐ93 trillion (nearly US$4 billion) in 2022 and 2023.

In a recent report submitted to the Ministry of Industry and Trade (MoIT) and the Committee for Management of State Capital at Enterprises (CMSC), EVN delivered a bleak picture of its financial balance in 2022 due to high fuel prices and volatile foreign exchange rates.

Despite efforts to save costs by optimising cash flow, mobilising hydroelectric power and reducing high-cost thermal power sources, EVN still recorded a total loss of nearly VNĐ29 trillion in 2022.

Based on the anticipated output of 251.3 billion kWh in 2023, Việt Nam’s largest electricity producer foresees a bigger loss of up to over VNĐ64 trillion this year if the electricity prices are not adjusted.

The average retail price of electricity in 2023 will still stay at VNĐ1,864/kWh, which has not been revised since 2019.

A representative of EVN told Lao Động (Labour) newspaper that for each kWh of electricity sold, EVN would bear a loss of VNĐ197.

Only hydroelectricity sources will bring profits, but hydroelectricity only accounts for 33 per cent of the output in 2023. Meanwhile, coal-fired power, gas turbine, oil-fired power and renewable energy, which comprise 67 per cent of the output, have a higher cost than the current retail price.

Therefore, the group said if the electricity prices are not adjusted upward, the accumulated loss of over VNĐ93 trillion in two years will result in 44.8 per cent of State capital at EVN.

Data from Tiền Phong (Pioneer) newspaper revealed EVN incurred a loss of VNĐ11.2 trillion in the first two months of this year.

According to EVN’s leaders, while coal and gas prices have been implemented in line with the market mechanism, the retail price of electricity has not been adjusted in time to the fluctuations of input, which is causing significant financial pressure on EVN.

Potential scenario

Late in 2022, EVN proposed to the Minister of Industry and Trade to consider adjusting the retail price of electricity but was turned down due to inflationary pressure.  

In a meeting with EVN in February, Minister of Industry and Trade Nguyễn Hồng Diên said any adjustment of electricity prices would need to be thoroughly assessed due to its significant impact on inflation, people's lives and the Government's macroeconomic management.

The latest data from the General Statistics Office showed the consumer price index rose 4.18 per cent in the first quarter. Rising electricity costs would impact many industries and challenge the Government’s effort to maintain inflation at a comfort zone.

At a recent meeting of the Steering Committee on Price Management, Deputy Minister of Industry Đỗ Thắng Hải said electricity prices would inevitably be adjusted in the coming period, requiring the calculation of other commodity prices to make the appropriate modification.

According to economist Đinh Trọng Thịnh, an increase in electricity prices in 2023 would be justifiable, but it could not happen in April as suggested by some relevant units. A new retail electricity price plan must be developed, and this process involves a thorough audit and review of the results, which may take a considerable amount of time.

A new price plan would likely happen in the second quarter or the third quarter, Thịnh said and predicted two scenarios, in which the price may increase to VNĐ2,162/kWh (up 15.9 per cent) or VNĐ2,243/kWh (up 20.3 per cent). — VNS