VINACHEM

Profits up to 400 percent

The third quarter finance reports of power companies belonging to EVN and thecompanies where EVN holds the controlling stakes showed that they made fatprofits in 2012 thanks to the higher power prices and the profuse supply ofwater for hydropower plants.

Some of the companies have reported the profits triple that in 2012, or up by400 percent, mostly thanks to the higher sold output and the power priceincrease.

The Thac Ba Hydropower Plant Company, a subsidiary of EVN, for example, hasreported the post tax profit of VND97.7 billion by the end of the third quarterof 2012, up by 303.5 percent over the same period of the last year. The fatprofit has been attributed to the increase of 65 percent in the merchandisepower output and the higher electricity price.

The Vinh Son – Song Hinh hydropower plant, where EVN holds 30.5 percent ofchartered capital, has reportedly made the post tax profit of VND360.4 billion.

A series of other companies have also reported satisfactory profits. The Ry NinhII hydropower power plant of the Song Da General Corporation, has reported theprofit of VND7.13 billion. The Central Power Investment and Development Company,according to General Director Nguyen Hoai Nam, made a profit of VND4.6 billion.The Thac Mo hydropower plant has the 9-month profit double the targeted figurefor the whole year 2012.

Making fat profits, but still insisting on raising retail prices

The giant EVN has not declared its profit for 2012. However, the conglomerateplans to make the profit of VND3.5-4 trillion in 2012. This does not include theprofit earned from the power price increases, applied as of December 20, 2012.The profit from the price increase alone, estimated at VND4 trillion dong, is tobe entered in the accounts in 2013.

Tien Phong has quoted its reliable sources as saying that the actual profit ofEVN in 2012 could be even higher than the estimates of the group, since someother sources of income still have not been taken into account.

Dr. Ngo Tri Long, a well-known pricing expert, believes that it is necessary toreconsider the power price increase initiated by EVN in 2012 and clarify why EVN,though making fat profits, still insisted on the power price increases,reasoning the lack of money for re-investment.

“The inflation rate was low in 2012, below 7 percent, while the dong/dollarexchange rate was stable. Meanwhile, hydropower plants could sell high volumesof power due to the higher demand. Why did EVN still insist on the priceincrease, then?” Long questioned.

He went on to say that the power price is adjusted after considering the inputproduction costs of power generators. Therefore, it is necessary now to check ifEVN’s input costs increased in 2012.

Long has repeated his viewpoint that it is not a wise move to raise the powerretail prices in the context of the weak demand, high inventories and exhaustedpurchasing power, which all have pushed businesses against the wall.

An expert from the Vietnam Energy Association said that the current electricityprice at VND1.506 per kwh, or UScent7.2 per kwh is not low if compared withother countries.