EVN confirms $192 mln profits following power price hike

The Electricity Group of Vietnam (EVN) Friday confirmed they will post an enormous VND3.5 trillion – 4 trillion (US$168.2 million - $192.31 million) profit this year, just one day after announcing the 5 percent hike on power prices as of today, December 22.

“Despite the profits, EVN had to increase power prices to make up for the losses in previous years,” the state-run company said at a media meeting on Friday.

Today saw Vietnam’s second power price hike of this year since July, with prices set to go up by 5 percent. The average power price will thus rise to VND1,437 a kWh from VND1,369, excluding value-added tax.

EVN said VND3.5 trillion will be used for offsetting losses.

“The government has ordered that EVN completely make up for the losses of previous years in 2012 – 2013,” EVN deputy CEO Dinh Quang Tri told reporters.

Tri said another reason for the power price hike is the increasing input costs for power production.

“The Ministry of Finance ordered on September 15 that we increased the buying prices on coals, which is a VND900 billion overrun cost,” he said.

“Moreover, gas prices have also repeatedly soared.”

EVN is expecting to rake in more than VND7 trillion from the price increase, and most of the sum will be used to cover overrun expenses, Tri said.

‘Consumers never accept price hike’

Asked whether it is appropriate to release a power price hike amid these hard economic times, Tri said in the view of consumers, no price hikes are ever suitable.

“But in a larger view, as EVN mostly buys power from generators and resell to consumers, it cannot demand low buying prices, as it will discourage generators and thus affect the electricity supply for the economy in the future,” he explained.

He added that EVN has worked with the power-consuming manufacturing plants, and was told that power prices in Vietnam are not too high.

“What’s important to them is adequate supply. Power cuts will cause more damages than hiking prices,” he said.

Companies lament

The power price hike, meanwhile, has been decried by local manufacturers, who say the higher power prices will only exacerbate their hardship.

“It’s a total surprise. I have never heard of the power price hike until it was eventually announced,” said Do Phuoc Tong, director of mechanics company Duy Khanh.

Power cost accounts for 4 percent of the company’s total expenses, and the increase will thus hit him with severe effects, he lamented.

“Businesses and consumers have constantly complained about power prices but the Ministry of Industry and Trade may have never listened.”

Meanwhile, Tran Ba Dung, deputy director of sales of the handbag manufacturing company Huong Mi, has another concern.

“It’s common for prices of other commodities such as water or fuel to increase following the power price hike,” he said.