EVN is allowed to increase electricity prices when costs increase by 3-5%

If the input parameters that make the updated base electricity price fluctuate increase by 3-5% compared to the current electricity price, EVN can decide to adjust the price; the Ministry of Industry and Trade and the Ministry of Finance will carry out post-inspection.

This is one of the conclusions at the meeting on strategic solutions to improve the financial situation of Vietnam Electricity Group (EVN) and its member units chaired by Deputy Prime Minister Hoang Trung Hai.

If the input cost of electricity price increases by 3-5%, EVN will have the right to decide to increase electricity price. Illustrative photo

Accordingly, the Deputy Prime Minister requested the Ministry of Industry and Trade to coordinate with the Ministry of Finance and direct EVN to develop a plan for the Ministry of Industry and Trade to submit to the Prime Minister to amend Decision No. 69/2013/QD-TTg dated November 19, 2013 regulating the mechanism for adjusting the average retail electricity price and Circular No. 12/2014/TT-BCT dated June 1, 2014 regulating the calculation of the average retail electricity price in the direction: if the input parameters that make the updated base electricity price fluctuate increase by 3-5% compared to the current electricity price, EVN is allowed to decide to adjust the price; the Ministry of Industry and Trade and the Ministry of Finance will carry out post-inspection work.

To improve EVN's financial situation, the Deputy Prime Minister assigned the Ministry of Industry and Trade to speed up the negotiation process of build-operate-transfer (BOT) contracts, ensuring the rights of investors and power buyers, and ensuring that projects operate on schedule.

On EVN's side, develop a plan to implement the proposals that Mercados Consulting has developed on Strategic Solutions to Improve the Financial Situation of EVN and its Member Units, submit to the Ministry of Industry and Trade and the Government for approval before February 28, 2015; coordinate with the WB to study the exchange rate risk management plan (hedging) and report to the Ministry of Finance to submit to the Prime Minister for consideration and decision. At the same time, EVN needs to urgently implement the plan to equitize Power Generation Corporation 3 (Genco 3), and at the same time develop a plan to equitize the remaining 2 Power Generation Corporations.

Currently, the total loss that EVN is “bearing” is up to nearly 17,000 billion VND. This group has also “voiced” that it wants to account for the loss of about 8,000 billion VND from newly arising costs such as increased coal prices for electricity, increased environmental costs... into the electricity price in 2015.

At a press conference last week, Deputy Minister of Industry and Trade Do Thang Hai said that EVN's financial situation is very difficult. According to the World Bank's calculations, if electricity prices are not adjusted up in the near future, EVN will fall into bankruptcy.

Recently, the Prime Minister requested EVN to review and take specific and drastic measures to drastically reduce electricity production and business costs, especially to reduce loss rates and improve labor productivity.

According to Infonet