Power plants sell cheap electricity, consumers buy high
03-09-2015 13:33:07+07:00
Power plants sell cheap electricity, consumers buy high
In the last three years, Electricity of Vietnam (EVN) has bought electricity from power generators at the average price of VND1,087.3 per kwh and sold it at VND1,622 per kwh on average.
EVN now holds 70 percent of power generation sources, while the remaining 30 percent are power plants developed by coal and oil & gas groups.
All of the power plants in the market sell wholesale electricity to EVN.
According to the Electricity Regulatory Authority of Vietnam (ERAV), EVN buys at VND1,087.3 per kwh and sells at VND1,622.
Some analysts commented that with the large gap of VND600 per kwh between the sell and buy prices, EVN can make high profits.
An official of the Ministry of Industry and Trade (MOIT) said power plants sold 90 percent of their output to EVN at fixed prices under contracts signed before with EVN, and sold the remaining 10 percent at the market price.
He also said that EVN had to spend big money on transmission lines, and if necessary, generated power with oil, which has high production cost, to ensure sufficient supply of electricity.
Therefore, the average retail price does not mean EVN made high profits.
According to Nguyen Anh Tuan, head of ERAV, the price in the competitive market now truly reflects supply and demand.
However, the explanations cannot satisfy the public, which pointed out that though EVN has complained it has to retail electricity at below production costs, it still can make big profits.
Viettimes cited a report as saying that in 2012-2014 EVN had post-tax profit of the holding company reaching VND530 billion and ratio of profit on stockholder equity 0.35 percent.
Tran Van Ngai, dean of Economics of the HCM City Agriculture & Forestry University, noted that the expenses on transmission lines and other expenses were not enough to make the retail price so high.
He believes that EVN set the retail price at a high level because it has to buy electricity at a high price from China.
A report showed that the average buy price from China is VND1,300 per kwh, or VND456 per kwh higher than the price at which EVN buys power from domestic plants.
Ngai thinks that mismanagement and a high percentage of loss in transmission have also pushed retail prices up.
Whether EVN makes profit or takes losses remains unanswered because EVN is still the only electricity wholesale buyer.
