Request to clarify the cause of EVN's loss in 2023

Clarifying EVN's losses in 2023

That is one of the contents pointed out by the Supervisory Delegation in the report recently sent to the National Assembly Standing Committee on "Implementation of policies and laws on energy development in the 2016-2021 period".

According to the monitoring team, the retail electricity price was most recently adjusted on May 4, 2023, after more than 4 years while input fuel prices increased many times.

Since the end of 2021, the price of imported coal has increased and by mid-2022 it had exceeded 160 USD/ton. Although domestic coal sold to the electricity industry is controlled and cannot increase in price, to ensure quantity and quality for each type of power plant, it must be mixed with imported coal and the price must increase according to the ratio of imported coal.

The proportion of coal-fired power in the national electricity output structure in 2022 accounts for 39%. The purchase price of wind and solar power is also higher than the average retail price. The price of gas-fired power has also increased somewhat, although it is still lower than the international price. Thus, the input of Vietnam Electricity Group (EVN) must be purchased at market prices, but the output is stable and has not increased since 2019, causing heavy losses for EVN at over 26 trillion VND in 2022.

In 2023, fuel prices have decreased compared to the previous period, however, EVN still lost nearly 29,000 billion VND in the first 8 months of 2023. The National Assembly Standing Committee's energy monitoring delegation said that it is necessary to continue to promote supervision, auditing, inspection, examination, investigation and conclusion, and thoroughly handle outstanding cases.

In particular, in 2023, clarify the causes of losses of state-owned corporations and groups developing energy in recent times (including EVN with a loss of nearly VND 29,000 billion).

Research, propose or decide on solutions to resolve the situation, avoiding risks and financial imbalances.

At the same time, strengthen the responsibility and coordination of activities of sector management ministries, localities and investors to resolve problems in implementing policies and laws on energy development, focusing on site clearance and conversion of forest use purposes for transmission grid and distribution grid projects.

Adjusting retail electricity prices in accordance with actual fluctuations

The monitoring delegation also proposed timely adjustment of retail electricity prices according to actual fluctuations in input parameters, fuel prices, exchange rates, and the electricity market, ensuring macroeconomic stability and social security.

At the same time, it is necessary to cover costs and make reasonable profits to preserve the business capital of the enterprise, ensuring transparent electricity prices for inspection and control.

Early legalization of retail electricity price management in the spirit of "removing all barriers to ensure transparent energy prices decided by the market", not implementing cross-subsidization of electricity prices between customer groups, between regions, shortening the time between electricity price adjustments; flexible retail electricity price management, closely following market developments.

Regarding EVN's loss of nearly VND 29,000 billion in the first 8 months of 2023, Mr. Nguyen Xuan Nam - Deputy General Director of EVN said that the group was assigned by the Party, Government and State with more tasks and goals than just economic goals. The most basic task is to provide enough electricity for the country and for economic development.

EVN is also making efforts to provide electricity to remote, mountainous and island areas. When investing in this activity, the selling price of electricity can be up to 7,000 VND/kWh, however, currently EVN only sells at a price of 1,900 VND/kWh.

"This is an example of the current story that EVN is facing. Because serving people's lives is the top priority, carrying out the tasks assigned by the Party and the State, EVN accepts that the selling price is much lower than the buying price," said Mr. Nam.

EVN leaders added that 2022 is a very difficult year for the group due to geopolitical instability in the world. When the Russia-Ukraine war broke out, input materials for electricity production such as coal, gas, oil... increased dramatically.

At one point, coal prices increased fivefold, reaching $400/ton. Oil prices also doubled. This increased the cost of electricity production, pushing up the price of electricity purchased, causing financial difficulties for EVN. By 2023, prices had cooled down but remained high.

"Although electricity prices have been increased by 3%, it only partially solves the problem," said Mr. Nam.

Source