The above information was given by Vietnam Electricity Group (EVN) in a presentation sent to the workshop on "Mechanisms, policies, and solutions to ensure sustainable energy development with a vision to 2050", organized by the Vietnam Energy Association on July 28.
EVN said that if it pays the electricity bill according to the contract, it is estimated that from July to December 2023, EVN will have a cash flow shortage. To ensure cash flow to pay for the cost of purchasing coal, oil, and gas for electricity production, EVN is in debt to power generation units.
In the coming time, it is possible that the group will not have enough money to pay for electricity purchases from power generation units, affecting the continuous operation of power plants and therefore, affecting the supply of sufficient electricity.
EVN also said it is facing difficulties in mobilizing capital and balancing capital sources to invest in power projects to ensure safe operation and supply of electricity for the following years.
EVN's finances are still very difficult.
Specifically, the failure to balance production and business results affects the financial indicators of EVN and its member units, leading to difficulties in maintaining the annual credit rating results of EVN and its corporations (EVNNPT, 5 Power Corporations) equal to the national credit rating.
In 2023, EVN's construction investment plan is VND94,860 billion. With the loss in production and business results, the group cannot repay its debts on time; banks and credit institutions will have more difficulty in approving loans and loan limits for EVN. In addition, costs and interest rates on loans increase due to the increased risk assessment for lenders.
Therefore, the Electricity Group proposed that the Vietnam Energy Association recommend the Government, the Prime Minister, ministries, branches and localities to find solutions to remove financial difficulties for EVN.
Specifically, EVN proposed to adjust retail electricity prices fully and promptly according to fluctuations in input parameters. Regarding the adjustment of average retail electricity prices, EVN hopes to be allowed by the Government and ministries and branches to continue to adjust retail electricity prices soon in the coming time to ensure balanced production and business results.
In order to have a basis for considering the next electricity price adjustments in 2023, the electricity price increases will not be abrupt and have a roadmap, the group recommends that the Government consider amending and replacing Decision No. 24/2017/QD-TTg.
The draft replacing Decision 24 on the mechanism for adjusting average retail electricity prices is being consulted by the Ministry of Industry and Trade. If the average electricity price needs to be adjusted to increase from 3% to less than 5% and is within the price range, EVN is allowed to adjust the price to increase at the corresponding level. The minimum adjustment period is 3 months.
In case the average electricity price decreases by 1% or more compared to the current average electricity price and within the prescribed price range, EVN will be responsible for reducing the price at the corresponding level. To implement the price reduction, EVN will prepare a report to the Ministry of Industry and Trade and the Ministry of Finance for inspection and supervision.
Electricity price should follow the market
Speaking at a recent workshop on electricity prices, a representative of the Electricity Regulatory Authority (Ministry of Industry and Trade) assessed: Because electricity is a sensitive commodity, changes in electricity prices can affect the macro-economy and people's lives as well as business production, Decision No. 24/2017/QD-TTg also stipulates reporting to the Prime Minister for comments on adjusting the average retail electricity price.
The decision to adjust electricity prices is considered based on a general assessment of inflation as well as the impact on businesses and people. Therefore, for some years, electricity prices are kept stable to ensure macroeconomic targets.
Therefore, it is necessary to study and legalize regulations on electricity price adjustment mechanisms to suit the tasks and powers of the Government and to be consistent with the practice of electricity price management in recent years.
This agency believes that it is necessary to regulate electricity price policies according to market mechanisms and electricity trading activities to ensure the development orientation of the electricity market, to achieve goals such as: electricity prices according to market mechanisms, to promote a competitive, transparent, fair and effective electricity market, to strengthen decentralization and delegation of authority in the management and operation of electricity prices through electricity trading activities.
Dr. Nguyen Dinh Cung, former Director of the Central Institute for Economic Management, acknowledged that currently, EVN - essentially the parent company of EVN - is the only one who buys, distributes and supplies electricity to consumers. However, EVN basically cannot decide or impose the purchase price, and must buy and sell electricity at prices regulated by the state.
Mr. Cung recommended that the Ministry of Industry and Trade and EVN should be allowed to be more proactive in adjusting retail prices flexibly to keep up with market fluctuations.
On May 4, the average retail electricity price was adjusted up by 3% (from VND 1,864.44 to VND 1,920.3732/kWh), helping EVN earn an additional VND 8,000 billion from the time of price increase until the end of 2023. According to the 2022 Consolidated Financial Statements audited by Deloitte, the total loss in 2022 of EVN's parent company was more than VND26.5 trillion. In the consolidated business results, EVN lost VND20.7 trillion. Meanwhile, in 2021, this unit made a profit of more than VND14.7 trillion. Audited figures also show the reason for the group's losses. That is, the selling price of electricity is lower than the purchase price, reflected in the revenue from selling electricity and the cost of electricity. |
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