Vietnam’s Three Big Conglomerates Report Losses, Blaming Each Other

VietNamNet Bridge – While Vinacomin and PetroVietnam complain that they incur loss because they have to sell coal and gas at low prices to the Electricity of Vietnam (EVN), the power group complains that it incurs loss because of having sell electricity at the prices lower than the production costs.

Coal producer blames loss on EVN

According to the Vietnam Energy Association (VEA), inspectors have found from a fact-finding trip to the Cao Ngan, Na Duong I, Cam Pha I, Cam Pha II and Mao Khe thermopower plants a lot of problems existing over the last four months, since the day the competitive power generation market became operation on July 1.

Though the thermopower plants of Vinacomin (the Vietnam Coal and Mineral Resources) all have been equipped with modern and standard equipment and machines, the plants have been operating at just 30 percent of the designed capacity, while many power generation units are under the “off” mode.

Especially, since Vinacomin’s power plants cannot sell electricity to EVN in big quantities, while the operation centers and power plants still cannot cooperate well, power plants have to stop and restart regularly, thus causing a big waste of money.

Coal producer blames loss on EVN

VEA said that it takes about 3-4 billion dong for every time of restarting.

Regarding the electricity price, Na Duong and Cao Ngan plants sell electricity to EVN at over 800 dong per kwh, while Cam Pha 1 and Cam Pha 2 with the capacity of 670 MW can sell at 800 dong only.

As such, if counting on the dong/dollar exchange rate fluctuations and the real coal prices, the coal-run thermopower plants of Vinacomin would incur the loss of trillions of dong.

“Vinacomin now suffers the dual losses in doing business with EVN: It has to sell coal cheaply to EVN and sell electricity at low prices to EVN,” the VEA’s report says.

The cumbersome apparatuses

VEA has suggested that the Ministry of Industry and Trade and PetroVietnam should reconsider the structure of the two power plants Nhon Trach I and Nhon Trach II.

The Nhon Trach I (450 MW) and Nhon Trach II (750 MW) both have the high investment rates and large depreciation. They have to buy gas at 4.8-5 dollars per 1 million BTU, which is higher than that of the Phu My Power Center. This leads to the high production cost of 1200 dong per kwh.

Meanwhile, Nhon Trach I can sell power at over 1100 dong per kwh only to EVN, and Nhon Trach II at over 1000 dong. The sale at below the production cost, plus the exchange rate fluctuations both have made the plants take loss.

Ca Mau I and Ca Mau II (750 MW) also have to buy gas at high prices, while they can earn 1100 dong per kwh from selling electricity to EVN, or just 5 cent per kwh.

VEA believes that it would be better to merge Ca Mau I and Ca Mau, which would allow reducing the expenses on the personnel, thus helping reduce the production costs.

Tens of trillions of dong lost in economic recession

The O Mon thermopower plant invested by EVN have been running with FO oil at high prices over the last few years, which leads to the high electricity production costs, hovering around 3500-4500 dong per Kwh. The power plants in Ba Ria – Vung Tau provine, Phu My and Nhon Trach also had to run with DO oil when there was no gas.

As a result, EVN has incurred the loss of tens of trillions of dong.

The economic recession has made EVN fail to earn tens of billions of dong because of the sharp falls in the electricity sold to production enterprises which previously consumed 70 percent of EVN’s merchandise power.


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