LookAtVietnam Bridge – As LookAtVietnam has reported, PetroVietnam complains that it is suffering losses as the Electricity of Vietnam (EVN) refuses to buy all the electricity PetroVietnam’s Ca Mau 1 power plant can provide. However, EVN thinks that PetroVietnam is making profit.

Where to buy electricity? It’s the right of EVN

Living together with electricity cuts

Lam Du Son, a member of EVN’s management board, was interviewed by Tuoi tre newspaper about the situation with EVN and PetroVietnam.

People say that EVN deliberately does not purchase from PetroVietnam and does not use domestic supply sources in order to drive up the electricity price. What would you say about this?

We are incurring the loss of VND2tril every year when we sign contracts on purchasing electricity from Ca Mau 1. We have to purchase at UScent6.5/kwh, while we sell at UScent5.3. Meanwhile, we still have to pay transmission fees.

PetroVietnam said that China’s electricity price is higher than that offered by PetroVietnam, but you still buy China’s electricity instead of PetroVietnam’s.

The price of China-sourced electricity is UScent4.5/kwh, while we sell at US4cent5.3, so we break even with the purchase deal. Meanwhile, if we buy electricity from PetroVietnam at UScent6.5/kwh and sell at UScent5.3/kwh, we certainly suffer loss. I do not say PetroVietnam is selling at dear prices, it is selling cheap. The problem lies in the fact that we have to sell electricity at prices lower than the production cost, and we suffer losses as a result.

Does the state compensate you for the losses?

No, no compensation at all.

So EVN cuts electricity regularly, which has been badly affecting production.

No, I don’t say that. The most important task of EVN is to provide enough electricity for production. In order to economise costs, in peak hours, we have to use electricity from all supply sources, while in normal hours, we have to focus on the supply sources with lower prices. We are purchasing electricity from China at UScent4.5/kwh, and we purchase when we need, and do not purchase if we don’t have demand.

EVN never thinks of driving up the electricity price. The state well understands that we have to purchase electricity at high prices and sell at low prices. However, the state will decide the electricity sale prices after considering the socio-economic conditions.

People in the Cuu Long River Delta say that electricity cuts occur all day long.

I cannot say anything about that because I’m not the manager. You should ask EVN’s General Director or Deputy General Director, who determine the interruptions.

PetroVietnam said that it has been suffering losses as EVN does not purchase electricity.

I would agree with PetroVietnam if it says it does not make fat profit. In general, investors demand the profit of 10-12% for their investment projects. Meanwhile, as far as I know, PetroVietnam makes the profit of 7% only.

As I said above, EVN is suffering the loss of VND2tril every year when it purchases electricity from PetroVietnam. Why do we still purchase PetroVietnam’s electricity? Because we know that the price will increase in accordance with the roadmap.

In fact, I think if considering the production cost, PetroVietnam should sell at US$6.7-6.8/kwh. I know that PetroVietnam has good will when it sells at UScent6.5/kwh only. As a state owned group, we have to follow the instructions from higher levels.

PetroVietnam does not have reliable information to say that China-sourced electricity is more expensive than PetroVietnam’s.

It seems that it is very difficult to access the management board of EVN these days. I tried to contact Nguyen Manh Hung, Deputy General Director, but I failed, while the General Director also did not answer the calls.

I have made suggestions to the management board that we have the responsibility of meeting press agencies and explaining what they do not understand. Newspapers have reported some false information, partially because they haven’t been able to meet the management board.

(Source: Tuoi tre)