Pursuing financial arrangements for power grid projects

In 2013 alone, 50 new projects will be launched with a total investment capital of more than 12 trillion VND. This is considered a necessary solution to ensure sufficient electricity supplies for Vietnam’s socioeconomic development, especially in the southern region in the coming years.

Chairman of Vietnam National Power Transmission Corporation (EVN NPT) Dang Phan Tuong said among power grid projects to be carried out in 2013, many projects have special importance in ensuring the sufficient electricity supplies for the southern region such as the 220kV Dak Nong - Phuoc Long - Binh Long; 500kV Pleiku - My Phuoc - Cau Bong; Song May - Tan Dinh, Vinh Tan - Song May and Phu My - Song May transmission lines.

By the end of 2013, EVN NPT will start the construction of the 500kV Duyen Hai - Tra Vinh project and the 500kV transformer station of Long Phu Thermal Power Plant and Thien Luong Thermal Complex approved in the master plan.

More than half of the planned projects are funded by international organisations like Asian Development Bank (ADB), the KfW Banking Group, NEXI and domestic commercial banks.

However, accessing capital has faced difficulties due to the too high capital demands and the too low power transmission costs (accounting for only 6-7 percent of the electricity prices). For this reason, revenue could only offset production costs.

In addition, EVN NPT’s debt-equity capital ratio has increased by 4.4 times, resulting in more difficulties in financial arrangements. This is also a big problem mentioned by Deputy Prime Minister Hoang Trung Hai when he instructed solutions to remove difficulties and accelerate power projects in the coming time. He assigned the domestic commercial banks make financial arrangements guaranteed by the government.

In Announcement 344/TB-VPCP, Deputy PM Hai also assigned the Ministry of Industry and Trade to review and adjust the 2013 electricity transmission costs and work out a roadmap to increase these costs by 2015 and in the 2016-2020 period.

The rise in electricity transmission costs must suit the roadmap to increase electricity retail prices which could ensure the corporation’s finances so that it could arrange capital resources to accelerate the construction of power transmission networks, meeting the n-1 standard.

Tuong of the EVN NPT also said the corporation has also been simultaneously implementing many power projects in 2013 worth over VND12 trillion and in 2014, 2015 of 17 trillion VND per year.

At present, EVN NPT has signed credit contracts to make financial arrangements for 42 out of the 50 projects launched in 2013 and eight remaining projects are expected to be arranged by the end of this year. It has also planned to raise long-term capital resources for those projects approved in the master plan and strive to diversify sources of capital.

“To ensure sufficient financial arrangements for investment in power projects, EVN NPT is intending to speed up progress of the projects, seek for solutions to reduce costs, and diversify and take full advantage of the preferential sources of capital,” Tuong said.