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EVN still in financial distress despite electricity price hike

The Saigon Times

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HCMC – Vietnam Electricity Group (EVN) has said it is still grappling with financial woes despite a 3% increase in retail electricity tariffs, which has been applicable since May 4 and is expected to boost EVN’s revenue by VND8 trillion this year.

EVN said that several factors had continued to affect costs of electricity generation and distribution this year. The estimated cost of electricity production stands at some VND2,100 per kWh, about VND178 higher than the average retail price.

Climate-related issues have played a role in EVN’s difficulties, with the water levels of major hydroelectric reservoirs ebbing towards the end of the dry season. Repeated disruptions in large thermal power plants have also strained supply.

EVN expects to produce 13.9 billion kWh less hydropower in 2023 than expected by the Ministry of Industry and Trade, but will increase coal-fired power generation by 9.3 billion kWh, diesel-fired power by 1.2 billion kWh, and renewable energy by 1.3 billion kWh. These figures represent significant changes compared to 2022, with a sharp drop in hydropower generation and considerable increases in coal, oil, and renewable energy production.

Rising input costs have put a heavier burden on EVN, with the cost of imported coal surging by 2.97 times versus 2020, and 1.3 times against 2021. Similarly, the cost of oil has risen by 1.86 times compared to 2020 and 1.13 times compared to 2021.

EVN has taken cost-cutting measures to ease its financial woes, with total savings put at over VND4.3 trillion in the first nine months of this year. Savings have been achieved by cutting 10% of regular expenses and reducing major repair and maintenance costs by 20-30% across all member units. Consequently, the costs associated with electricity transmission, distribution, and retail have steadily decreased over the years.

However, electricity generation costs heavily depend on the power generation stage, accounting for a substantial 82.8%. Thus, fluctuations in generation costs have a significant impact on the overall production cost of electricity, resulting in high production costs.

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