Trung Nam was approved by the Ministry of Industry and Trade to buy electricity at a higher price, ignoring warnings.

Buy electricity at overpriced price

Specifically, regarding the purchase and sale of electricity at Dong Nai 2 Hydropower Plant, the conclusion of the Government Inspectorate stated that on May 9, 2014, the Electricity Trading Company and Trung Nam Hydropower Joint Stock Company signed a power purchase contract with a provisional price of VND 1,740/kWh.

This price is 757 VND/kWh higher than the ceiling price of the 2013 electricity generation price frame applied to hydropower plants (983 VND/kWh) stipulated in Decision No. 8440 dated January 15, 2013 of the Ministry of Industry and Trade .

Although EVN later proposed to make temporary payments according to the ceiling price prescribed for each year, the Ministry of Industry and Trade approved the temporary payment price of VND1,740/kWh, exceeding the prescribed price range. This is not in accordance with the provisions of the Electricity Law and does not ensure a legal basis.

After the investor settled the investment capital, the inspection conclusion determined: "The Electricity Trading Company and the investor renegotiated but the electricity purchase price still exceeds the prescribed framework. This is beyond the authority to approve the contract of the Electricity Regulatory Authority, but the Authority has not yet inspected the electricity purchase contract, reporting to the Minister for consideration and settlement according to authority."

At the same time, the inspection determined that EVN and Dong Nai 2 Hydropower Joint Stock Company did not promptly report to the Electricity Regulatory Authority to inspect the power purchase contract after negotiating and initialing the power purchase contract on the basis of investment capital settlement, which is not in accordance with regulations.

This is the cause and reason leading to the electricity purchase and sale price exceeds the regulated framework that needs to be checked and considered by the Ministry of Industry and Trade and EVN.

The Ministry of Industry and Trade approved the temporary payment price for investors "exceeding the ceiling". Photo: Trung Nam

Meanwhile, the above-mentioned, defects and violations have led to the negotiation, inspection, approval and handling of problems regarding electricity purchase prices and electricity purchase contracts of Dong Nai 2 Hydropower Plant, which has taken place since December 2008, not being completely resolved in accordance with the provisions of law and the electricity purchase contract. Therefore, the inspection agency determined that the responsibility belongs to EVN, the Electricity Regulatory Authority and the Ministry of Industry and Trade.

Similar violations also occurred at Song Bung 4 Hydropower Plant. The Electricity Trading Company and Phu Thanh My Joint Stock Company (investor of Song Bung 4) signed a contract with a price of VND1,271.84/kWh, exceeding the 2015 price frame by VND211/kWh. The result of this negotiation was not reported to the Electricity Regulatory Authority. According to the Government Inspectorate, the responsibility lies with EVN.

In July 2022, EVN and Phu Thanh My Joint Stock Company signed a contract to amend and supplement the power purchase contract, in which the official price was 1,110 VND/kWh, equal to the ceiling price for hydropower plants in 2019. However, the above violations led to negotiations and handling of issues regarding the power purchase price and the purchase contract lasting more than 10 years without being resolved. The responsibility belongs to EVN, the Electricity Regulatory Authority, and the Ministry of Industry and Trade.

Ignoring the recommendations of the State Audit

The inspection conclusion also points out that the recommendations of the State Audit regarding financial handling at Vung Ang 1 and Dong Nai 5 Thermal Power Plants have not been implemented by the parties, leading to many years of delay.

specifically, on September 5, 2016, the State Audit reported the results of the audit of construction activities and the management and use of investment capital for the Vung Ang 1 Thermal Power Plant Construction Investment Project and the Vung Ang Power Center 500KV Distribution Construction Investment Project, in which it recommended financial settlement with a total deduction of nearly VND 3,140 billion.

But at the time of inspection, the renegotiation to adjust the electricity purchase and sale price had not been carried out by EVN, EPTC and PV Power according to the conclusions and recommendations of the State Audit.

Regarding the Dong Nai 5 Hydropower Project, in May 2016, the State Audit recommended reducing the investment capital of this project by more than VND351 billion and requested to renegotiate the electricity price according to the project investment capital settlement, but by the time of the inspection, the adjustment of the electricity price had not been completed. It is worth mentioning that the Ministry of Industry and Trade received the audit report but had not yet directed EVN to renegotiate the electricity purchase price and adjust the electricity purchase contract.

Faced with these violations, the Government Inspectorate recommends that the Ministry of Industry and Trade work with relevant parties to renegotiate the electricity purchase price of this plant, and report to the Electricity Regulatory Authority and the Minister of Industry and Trade for consideration and decision.

The Government Inspectorate also requested relevant orders to review and handle responsibilities for unsafe and violations in these projects.

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