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

Buying electricity at overpriced prices

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 1,740 VND/kWh, exceeding the prescribed price range. This is not in accordance with the provisions of the Electricity Law and does not ensure legal basis.

After the investor finalized the investment capital, the inspection conclusion determined: "The Power Trading Company and the investor renegotiated, but the electricity purchase price still exceeded the prescribed framework. This is beyond the authority of the Electricity Regulatory Authority to approve the contract, but the Authority has not yet inspected the power purchase contract, and reported to the Minister for consideration and resolution 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 check 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 exceeding 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 shortcomings, defects and violations have led to the negotiation, inspection, approval and handling of problems regarding electricity purchase price and electricity purchase contract of Dong Nai 2 Hydropower Plant, which have taken place since December 2008, not being completely resolved in accordance with the 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 1,271.84 VND/kWh, exceeding the 2015 price frame by 211 VND/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 of the hydropower plant in 2019. However, the above violations led to negotiations and handling of problems 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 pointed out that the recommendations of the State Audit related to financial handling at Vung Ang 1 Thermal Power Plant and Dong Nai 5 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 yet 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 at 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 recommended 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 units to review and handle responsibilities for shortcomings and violations in these projects.

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