Equality in power supply and consumption
Equality in power supply and consumption
Improvement of power supply and commitment to compensation in case of electricity failures are what the power sector and the concerned authorities should carry out. This is to not only achieve equality but also ameliorate the investment environment.
While on a business trip in late March, our boss sent us managers in Vietnam an email informing about the power price hike and asking us to calculate how the rise would affect our company. The boss got the news from the association of U.S. companies in Vietnam. On the same day, we received an official notification from the electricity utility, saying that the power tariff would jump as of March 20 by almost 8% from the current rates.
I soon multiplied the average monthly power consumption of our company during the last six months by the new power tariff. Our company paid around VND7 billion a month for power, and would pay VND500 million additionally for the rise. That means we would have to spend VND6 billion in the next 12 months. That’s a huge figure versus the average monthly turnover of a Vietnamese enterprise.
On the second day after the date of my boss’s return to Vietnam, we attended an unscheduled meeting in which we discussed measures for coping with the power hike. We had to calculate again profit/loss, revise budget, reconsider business and investment plans to suit the new circumstance, and even review staff’s welfare. Of course, we had to send to our mother company a full account of the unexpected changes.
A short while prior to the price hike, our company and other counterparts were all requested to replace high-tension current equipment with medium-tension current one, which cost hundreds of millions of dong in each case. We were explained that the replacement would raise our power supply from 15kV to 22kV to make it stable. We were nonetheless coerced to buy the substituted equipment from a single manufacturer, and the breakdown of the costs had been preprinted on the bill which we had to sign “voluntarily.” If we didn’t sign it, we would not be connected to the State sources of power.
Power tariff has been on the rise constantly while power users have been compelled to invest heavily on equipment. However, the stable power supply has constantly obsessed us. Although our industrial park is right in one of Vietnam’s biggest metropolises, we suffered from at least once a month either a blackout or a brownout. Once, we got three electricity failures in a single month, resulting in a total loss of VND1.6 billion.
Not long ago, a blackout lasting for five hours on end left our company with a loss worth tens of thousands of U.S. dollars as two of our Japan-made automatic machines malfunctioned together with spoiled products then on the production line.
Following a power outage, the utility in question always sends us a letter of apology explaining what has happened and imploring us to forgive it. From all these letters, we have made a list of the causes of the electricity failures. They are failures due to electric discharge by counting meters, by ceramic insulators on the power grid and by transformers, to name just a few. But that’s all!
What we earnestly hope to know—how to tackle the problems, how losses would be offset, and how similar failures would be avoided—is nowhere to be seen. When queried by our foreign bosses whether these problems could be addressed, we could simply answer that it was all Vietnam’s power sector could do.
Each year, our company spends a huge sum buying insurance for the risks faced by us, such as fire or natural calamities. However, we are unable to sign an insurance policy covering risks to be caused by power outages. It’s simply because no insurer would dare to insure risks which are doomed to happen so frequently. Even when such a policy were accepted, the insurance premium would be prohibitively high.
A power buying-selling contract is by nature a civil agreement. However, in this case it fails to comply with the basic principles of a civil transaction, one of which is the equality principle for the two sides of the contract and the duty of compensation if a mistake is committed by one side. Power supply in Vietnam remains a monopolistic service which is provided by monopolistic businesses.
When appraising opportunities and challenges with which an investment can be expanded or new projects approved, many investors pay considerable attention to risks involving power problems. In other words, electricity is in fact an important factor in the investment environment which has a say in an investment decision.
Therefore, improvement of power supply and commitment to compensation in case of electricity failures are what the power sector and the authorities concerned should carry out. This is not only to achieve equality but also ameliorate the investment environment.
