Current electricity prices only benefit rich people: EVN

Thứ năm, 11/8/2011 | 13:56 GMT+7

Chair of the Electricity of Vietnam (EVN) Dao Van Hung believes that the current electricity pricing mechanism is not reasonable, because it only benefits rich people and encourages people and enterprises to use energy-wasting equipment.

* Do you think that the current electricity pricing mechanism is unreasonable? We think that we need to keep the electricity prices at low levels in order to support the poor people. In fact, the current electricity prices only benefit the rich people, because the poor only use little electricity. The current prices encourage people and enterprises to use the equipments which use energy ineffectively, thus causing the loss of trillions of dong. Also, the low prices cannot encourage people use electricity economically. It would be also a blunder to think that keeping the electricity prices at low levels can help curb the inflation. The low prices are just the “virtual” prices, while the “actual” prices have “gone” to the production costs for coal, oil or materials that serve production. If we keep the electricity prices at low levels which then encourages electricity waste, this means that we push the inflation up. The Vietnam Coal and Mineral Industries Group (Vinacoal) and the Vietnam National Oil and Gas Group (PetroVietnam), have both recently complained that EVN does not purchase all the electricity they have. What would you say about that? We make decisions on purchasing electricity after considering the benefits of the community and of people. There are about 80 power plants which offer electricity at different price levels. If we do not buy electricity from the power plants which have lower production costs, but mobilize electricity from the plants which set high prices, this would cause big losses to the State. I have to remind you that if we do not practice thrift in using coal and gas for power plants, this will lead to the natural resources depletion. The problem will become clearer in some 10 years. * EVN has taken over the duty of providing electricity to the Tan Thuan Export Processing Zone, Hiep Phuoc Industrial Zone and Phu My Hung new urban area after Hiep Phuoc Power Company stopped providing electricity due to prolonged losses. With the expected consumption of one billion kwh a year, how much more losses will EVN incur? <table width="200" cellspacing="5" cellpadding="5" border="0" align="right"> <tbody> <tr> <td style="text-align: center;"><img width="194" height="250" alt="" src="/UserFile/Files/ICON2021/CMSFiles/ENGLISH/News/O.DaoVanHung2.jpg" /></td> </tr> <tr> <td style="text-align: justify;">Chair of the Electricity of Vietnam (EVN) Dao Van Hung</td> </tr> </tbody> </table> It is estimated that if we takes over the electricity grid from Hiep Phuoc, we would incur the loss of over 100 billion dong a month, and 1500 billion dong a year. * EVN has been run the pilot power competitive market for one month. How have been things going? In fact, we have been preparing and practicing since 2007, which has helped EVN’s staff get used to their works. All the short term challenges have been settled. To date, no big obstacles have appeared. However, it is really not simple to regulate the power market. * Under the current regulations, five percent of the electricity prices must be paid at once. Has EVN got any difficulties with the capital with such regulations? The formula of the power competitive market says that five percent should be spot trade deals. This requires power generators to calculate the production costs and the offered sales prices, which will help better organize the production and cut down expenses in order to have optimum offered sales prices. Meanwhile, people can use electricity in the optimum way. We have not got any difficulties. The payment has not been made, because we are just on the trial basis. * The Government has approved the power generation development strategy for 2011-2020. Do you think the capital mobilization plan for implementing the strategy is feasible? In the past, EVN once well mobilized capital by issuing bonds, but we still cannot say anything about bond issuance in the context of the current gloomy stock market. In the strategy, the capital from bonds does not account for a big proportion. We plan to seek capital from different sources, including the loans from international banks such as WB, ADB, JBIC and bilateral institutions. Source: Vietnamnet Bridge