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EVN’s profits are up, but still insist on power price hike

Power companies in Vietnam all have reported big profits for 2012, up by 1.5-4 times in comparison with the last year. Meanwhile, the Electricity of Vietnam (EVN) expects the profit of VND 3.5-4 trillion.

Profits up to 400 percent

The third quarter finance reports of power companies belonging to EVN and the companies where EVN holds the controlling stakes showed that they made fat profits in 2012 thanks to the higher power prices and the profuse supply of water for hydropower plants.

Some of the companies have reported the profits triple that in 2012, or up by 400 percent, mostly thanks to the higher sold output and the power price increase.

The Thac Ba Hydropower Plant Company, a subsidiary of EVN, for example, has reported the post tax profit of VND97.7 billion by the end of the third quarter of 2012, up by 303.5 percent over the same period of the last year. The profit has been attributed to the increase of 65 percent in the merchandise power output and the higher electricity price.

The Vinh Son – Song Hinh hydropower plant, where EVN holds 30.5 percent of chartered capital, has reportedly made the post tax profit of VND360.4 billion.

A series of other companies have also reported satisfactory profits. The Ry Ninh II hydropower power plant of the Song Da General Corporation, has reported the profit of VND7.13 billion. The Central Power Investment and Development Company, according to General Director Nguyen Hoai Nam, made a profit of VND4.6 billion. The Thac Mo hydropower plant has the 9-month profit double the targeted figure for the whole year 2012.

Making profits, but still insisting on raising retail prices

The giant EVN has not declared its profit for 2012. However, the conglomerate plans to make the profit of VND3.5-4 trillion in 2012. This does not include the profit earned from the power price increases, applied as of December 20, 2012. The profit from the price increase alone, estimated at VND4 trillion dong, is to be entered in the accounts in 2013.

Tien Phong has quoted its reliable sources as saying that the actual profit of EVN in 2012 could be even higher than the estimates of the group, since some other sources of income still have not been taken into account.

Dr. Ngo Tri Long, a well-known pricing expert, believes that it is necessary to reconsider the power price increase initiated by EVN in 2012 and clarify why EVN, though making fat profits, still insisted on the power price increases, reasoning the lack of money for re-investment.

“The inflation rate was low in 2012, below 7 percent, while the dong/dollar exchange rate was stable. Meanwhile, hydropower plants could sell high volumes of power due to the higher demand. Why did EVN still insist on the price increase, then?” Long questioned.

He went on to say that the power price is adjusted after considering the input production costs of power generators. Therefore, it is necessary now to check if EVN’s input costs increased in 2012.

Long has repeated his viewpoint that it is not a wise move to raise the power retail prices in the context of the weak demand, high inventories and exhausted purchasing power, which all have pushed businesses against the wall.

An expert from the Vietnam Energy Association said that the current electricity price at VND1.506 per kwh, or UScent7.2 per kwh is not low if compared with other countries.

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