VND20 trillion needed for EVN projects

Electricity of VietNam (EVN) is short of VND20 trillion (US$960 million) in funds targeted for work on electricity projects during the remainder of the year. According to EVN’s report, the group has mobilised only VND54 trillion ($2.6 billion), which accounts for 73 per cent of its capital needs for 2012.

EVN’s 2012 development plan is part of a five-year plan that sets out targets on electricity production. Despite rising demand for power across the country, total productivity this year is 110MW lower than targeted.

According to Prime Ministerial decision 854/Qd-TTg, EVN’s productivity should reach an annual average growth of 13 per cent for the 2011-15 period.

For five years, EVN will operate 42 turbines at 20 power plants with total capacity of 11,600MW and improve more than 300 power transmission lines.

Total targeted investment for the five years is more than VND500 trillion ($24 billion). For this 2012, the amount is around VND74 trillion.

The shortfall in funds has led to calls for a delay in scheduled coal price hikes, over concerns that these price increases will lead to skyrocketing production costs for the electricity sector.

At the Ministry of Industry and Trade’s monthly review early this week, Dang Huy Cuong, Head of the Electricity Regulation Department, suggested a delay in increasing coal prices for the electricity sector.

Coal prices were scheduled to rise late this year or early next year, in what would be the third power price rise in this year.

According to Cuong, EVN’s calculation that electricity production will increase by 13 per cent next year was too high, as estimated GDP had risen at 5.5 per cent, a rate that was lower than expected.

In an interview with Nhan Dan (People) newspaper, a representative of the Finance Ministry said low electricity prices were one of the reasons for the shortfall in capital for power projects.

In addition, local investors do not have enough funds to invest in the projects and it takes time to mobilise capital from foreign sources, said the representative.

This year EVN has put into operation six turbines equivalent to 1,153MW, including turbine 5 and 6 at the Son La, Dong Nai 4 and Kanak hydro power plants. Ban Chat power plant is scheduled to generate electricity from its turbine 1 by the end of this year, with the second turbine set to begin generating power early next year.

In addition, EVN plans to start three projects with total capacity of 1,790MW. They are the Trung Son hydro power plant and O Mon I and Duyen Hai 3 thermal power plant