The cost of electricity production and trading in 2023 is more than VND 2,088.90/kWh, while the average commercial electricity selling price is VND 1,953.57/kWh, causing Vietnam Electricity Group (EVN) to receive a loss of VND 34,244.96 billion for pure electricity trading activities.
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| EVN is suffering huge losses because it buys electricity at high prices, while selling it to consumers at low prices. Photo: Huy Hung |
Debt entanglement of thousands of billions of dong
In the 2024 semi-annual report of the Vietnam Oil and Gas Group (PV Power), it was mentioned that the short-term receivables from the Electricity Trading Company under EVN as of June 30, 2024 were VND 11,224 billion. Previously, the short-term receivables from this partner at the beginning of the period, on January 1, 2024, were recorded as VND 9,634 billion.
It is worth noting that PV Power's net revenue from sales and service provision in the first 6 months of 2024 was recorded at VND 12,698 billion. In the first 6 months of 2024, PV Power also produced 8.574 billion kWh.
In the 2024 semi-annual report of PetroVietnam Gas Corporation (PV GAS), PV Power's receivables were recorded at VND3,674 billion. As of January 1, 2024, this debt was VND2,440 billion.
In addition to PV Power, PV GAS also has another customer with a debt of over 10% of the total outstanding debt listed as Phu My Thermal Power Company. This is a member of Power Generation Corporation 3 (EVN Genco3) - the unit responsible for producing electricity and selling to EVN.
With the gas-fired power production chain, where the gas fuel seller is PV GAS and the buyer is PV Power or Phu My Thermal Power Company/EVN Genco 3 to produce electricity, and then sell it to EVN, the mutual debt with figures of thousands of billions of VND, even over 10,000 billion VND, also shows the consequence of EVN's huge losses in the past 2 years from pure electricity production and trading activities.
In the 2024 semi-annual report of EVN Genco3 - where EVN is holding 99.19% of issued shares, the short-term receivables of the Power Trading Company - which is actually EVN, as of June 30, 2024 are also not small, at VND 10,252 billion. Previously, on January 1, 2024, this receivable was VND 8,812 billion.
Thus, even its own “children” cannot make EVN go easy on it. The explanation for this situation is that the price of electricity sold by EVN to the economy according to the regulations of state agencies is lower than the price of electricity that power producers sell to EVN.
Buy high, sell low, EVN suffers big losses
On October 10, 2024, the Ministry of Industry and Trade issued a brief notice on the results of the inspection of EVN's electricity production and business costs in 2023.
According to the results of the interdisciplinary inspection, EVN's total cost of electricity production and business in 2023 is VND 528,604.24 billion, while revenue from commercial electricity sales in 2023 is VND 494,359.28 billion.
Thus, in 2023, pure electricity trading will cause EVN to lose 34,244.96 billion VND.
However, due to some other sources of revenue also in electricity production and trading of 12,423.4 billion VND, considering the whole year of 2023, EVN's loss is 21,821.56 billion VND.
Pursuant to Decision No. 05/2024/QD-TTg dated March 26, 2024 of the Prime Minister regulating the mechanism for adjusting the average retail electricity price; Pursuant to Document No. 874/BCT-DTĐL dated October 11, 2024 of the Ministry of Industry and Trade; in order to minimize the impact on the economy and people's lives, implementing the direction of the Ministry of Industry and Trade, Vietnam Electricity Group issued Decision No. 1046/QD-EVN dated October 11, 2024 on adjusting the average retail electricity price. Accordingly, the average retail electricity price is VND 2,103.1159/kWh (excluding value added tax) from October 11, 2024. This adjustment is equivalent to an increase of 4.8% compared to the current average retail electricity price.
Previously, in 2022, the Inspection Team also confirmed that pure electricity trading caused EVN to lose VND 36,294.15 billion. After deducting income from activities related to electricity production and trading in 2022 of VND 10,058.36 billion, EVN ended up losing VND 26,235.78 billion (excluding income from other production).
Thus, in 2022-2023, with pure electricity trading activities, EVN lost 70,539.11 billion VND. Or if other income related to electricity production and trading is deducted, this loss figure, although reduced, is still more than 48,000 billion VND.
The above loss result does not include VND 18,032.07 billion, which is the exchange rate difference according to the power purchase contracts of power generation units from 2019 to 2023.
Every year, EVN has a revenue of more than 500,000 billion VND, but the loss in 2022-2023 alone has reached 70,000 billion VND with pure electricity trading activities, or at least nearly 50,000 billion VND (according to the deduction of some other income related to electricity production), not to mention 18,000 billion VND in exchange rate difference.
At the seminar "Electricity cost - Current situation and solutions" held after the Ministry of Industry and Trade announced the results of the inspection of EVN's electricity production and trading costs in 2023, former Director of the Price Management Department (Ministry of Finance) Nguyen Tien Thoa said that with the announced electricity production and trading costs, the electricity production and trading cost is more than 2,088.9 VND/kWh, while the average commercial electricity selling price is 1,953.57 VND/kWh.
“The above figures show that the cost price is 6.92% higher than the selling price, with a situation of buying high and selling low. Inputs follow the market, but outputs are not calculated correctly and fully in electricity production and trading, which will cause many consequences and inadequacies for electricity production and trading, and for the entire economy,” Mr. Thoa assessed.
The fact that the cost of electricity production is increasing while the selling price is not corresponding is also frankly stated by expert Ha Dang Son. If the current electricity price mechanism, subsidies and loss compensation are maintained, EVN will not have enough resources for investment, while the Prime Minister's direction is not to have a power shortage.
“If we do not continue to reform electricity prices, EVN will suffer losses, its financial reputation will be undervalued and it will be unable to borrow capital. Electricity prices cannot attract private investors. Maintaining current electricity prices will be extremely dangerous in the medium and long term and will not ensure economic development,” said Mr. Son.
Sharing this situation, Mr. Phan Duc Hieu, Standing Member of the National Assembly's Economic Committee, also said that the larger the difference between selling price and cost price, the greater the loss. This will cause many consequences affecting electricity producers, affecting investment in the electricity industry and affecting the security of the electricity industry. Along with that, it will affect the goal of economical electricity consumption and sustainable production transformation.
“We are setting too many goals, especially harmonizing the interests of all parties, which is difficult to achieve. Therefore, it is necessary to separate policies for each subject to both suit the interests of all parties and ensure energy security,” said Mr. Hieu.
Source: https://baodautu.vn/evn-lo-nang-vi-mua-cao-ban-thap-d227321.html
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