The draft amendment to Decree 72 on the mechanism for regulating electricity prices caused much controversy when it proposed to calculate the loss of more than VND 44,000 billion of Vietnam Electricity Group - EVN in electricity prices. To clarify the issue, Lao Dong Newspaper had an interview with Mr. Ho Sy Quang - Deputy Head of the Electricity Price Management Department, Electricity Department - Ministry of Industry and Trade.
Reasons for calculating EVN's loss of more than 44,000 billion VND in electricity prices
- EVN's proposal to allocate accumulated losses of more than VND44,000 billion to average retail electricity prices has raised public concerns about the reasonableness and transparency. What can you share about this issue?
- EVN's loss of more than VND44,000 billion has been made public in the years 2023 - 2024, through auditing reports and announcement of production and business results. In fact, this period is heavily affected by geopolitical factors. In 2022, when the Russia-Ukraine conflict broke out, fuel input prices for electricity production increased dramatically, oil and coal import prices increased very high, at times the import coal price increased to 350 - 400 USD/ton.
Meanwhile, to stabilize the economy while being affected by the COVID-19 pandemic, retail electricity prices in 2022 need to remain unchanged. That can be seen, on the one hand, input costs have increased sharply, while output has not been adjusted in a timely manner, leading to difficulties for EVN. This situation will not only occur in 2022 but will also last until 2023.
Following the Government's direction, electricity prices are adjusted to a "reasonable" level, not increasing in shock or speculation to support businesses and the economy. However, in the context of coal and fuel prices remaining high, the failure to promptly adjust electricity prices has caused EVN's losses to increase. This is a clear reality, but it has not been handled at the right time.
- If EVN's loss of more than VND44,000 billion is not resolved, what will happen, sir?
- If this loss is not handled, the group's capital, that is, State capital, will be directly affected. When there is no profit, EVN cannot accumulate to reinvest in power projects. This affects EVN's reputation with banks, increasing risks when borrowing capital, leading to stagnation in investment and reproduction, thereby affecting national energy security.
In the context of implementing the VIII Power Plan and the adjusted VIII Power Plan, many key projects needing large capital such as the Potential Hydropower Plant, Quang Trach Thermal Power Plant or the nuclear power project, if the costs directly serving power production are not recovered, EVN's business capacity will decrease significantly.
In principle, to invest and do business effectively, businesses must have strong counterpart capital. If counterpart capital is weak, borrowing capital will also be limited because banks will find it difficult to accept lending when their internal resources are not guaranteed.
Therefore, EVN's losses need to be handled through a mechanism to calculate and fully the reasonable costs of electricity production, but have not been accounted for and recovered at the right time. This recall was supposed to be carried out in the 2023 - 2024 period, but EVN has not yet been able to implement it.
- Financial reports for 2022 and 2023 have been audited and published on the EVN website but do not clearly show the detailed costs for the loss. This makes the public worried that it may include inappropriate costs, stemming from ineffective optimization in power management, production, transmission and distribution. What is your point of view?
- The issuance of financial reports must comply with current regulations. All data has been reviewed and verified by the independent auditing unit.
In addition, in 2023 and 2024, the Ministry of Industry and Trade organized inspection teams for the 2022-2023 budget with the participation of representatives of the Ministry of Finance, the Ministry of Labor, War Invalids and Social Affairs (now the Ministry of Home Affairs), the Vietnam Federation of Commerce and Industry (VCCI), the Government Office, the Consumer Protection Association... to compare and review audit data.
The published data are all transparent, and businesses must be responsible before the law for their accuracy. At the same time, the costs included in the electricity price structure must be direct costs, serving electricity production and business activities, not including expenses outside the permitted scope.
- In a market economy, businesses must shoulder business risks themselves. If all losses are " socialized", will this reduce the incentive for cost reduction, improve governance and make EVN's operations transparent, sir?
- EVN is a unit with a specific nature in performing the social function assigned by the Government in providing electricity to ethnic minority areas, mountainous areas, border areas, islands and areas with particularly difficult socio-economic conditions.
In the current context of no direct support mechanism from the state budget or the electrification development fund of the above regions, EVN has had to bear these costs because investing and supplying electricity in these regions is mostly a loss, not to mention matching capital or having profits from large investments but very low sales output.
If it is another enterprise, then with investment in power grids, transmission, and distribution compared to the revenue in these regions, businesses will usually not choose to invest.
Although investing and doing business in the above areas is at a loss, EVN has always completed the work of ensuring electricity supply and made efforts to reduce costs and improve governance to compensate for the above losses.
In addition to the costs related to electricity prices in the period of 2022-2023, in addition to the Ministry and the industry having inspected production costs, in 2024, the State Audit also conducted a thematic audit on " dien price management in the period of 2022 - 2023".
Regarding the level of governance, each unit has its own recognition and assessment. Currently, there is no general standard that stipulates what is optimal or not optimal, because that depends on the perspective and approach of each unit and each person.
However, in principle, any business is always looking for solutions to improve governance, optimize costs and improve operational efficiency. In particular, in the current context, competition between sectors and businesses is increasingly fierce, forcing units to make continuous efforts to improve and improve management capacity.
Electricity prices have increased "skyrocketingly" when "carrying" a loss of more than 44,000 billion VND
- In 2024 and the first half of 2025, EVN has adjusted electricity prices up 3 times. How does the Ministry of Industry and Trade assess the impact of calculating EVN's loss on electricity prices? How will this increase the average retail price of electricity in the coming time?
- Handling direct costs for electricity production that have not been recovered in previous years, in principle, if not accounted for in time, they must be recovered in the following years.
Specifically, if the loss arising from 2022 is calculated correctly and fully, it needs to be recovered in 2023; the loss cost in 2023 must be calculated in 2024. However, due to the need for support and economic development at each time, these costs have not been immediately included in the electricity price, so the inevitable consequences will have to be included in the following stages. If you don't adjust in advance, then adjust later, this is inevitable.
Of course, including these costs in electricity prices will more or less create a certain impact. However, according to regulations, how to include, allocate, and choose any time must be carefully calculated by EVN and coordinated with competent authorities, including the Department of Statistics - Ministry of Finance, to assess the comprehensive impact. This is not only to handle EVN's difficulties but also to consider the impact on people, businesses and socio-economic development.
It is possible that the entire loss of more than VND44,000 billion will not be included in the electricity price immediately. EVN and State management agencies will have a reasonable allocation plan to minimize negative impacts on the economy as well as people's lives.
- To help EVN escape losses, how much percentage is the electricity price expected to increase?
- There are currently no specific calculation data. However, according to personal experience, the increase will be moderate, within EVN's authority to regulate electricity prices, without any sudden increases.
This is to ensure compliance with the Prime Minister's direction of managing electricity prices in the direction of avoiding "pull-ups", ensuring harmonious benefits and in line with the socio-economic development goals, while remaining within the inflation threshold approved by the National Assembly.
- According to regulations, EVN is currently allowed to adjust electricity prices every 3 months. So when do you predict the next electricity price adjustment will be implemented?
According to current Decree 72, before the 25th of the first month of the fourth quarter, EVN will have to update all costs of power generation, including actual costs arising from the beginning of the year to the end of September, and at the same time, expect additional costs for the last 3 months of the year.
At the same time, EVN will also update electricity output and other suspended costs that have not been calculated for allocation. How to allocate and how much it affects electricity prices will be calculated in detail and made public in the coming time.
- As you just said, instead of "pushing" all the losses into electricity prices, what other solutions can be considered to handle EVN's financial difficulties?
The Ministry of Industry and Trade has issued a document directing EVN to increase regular cost savings to support, while promoting optimization in corporate governance. Handling difficulties cannot only rely on solutions for allocation to electricity prices, but must implement many synchronous measures.
In addition, the Group's internal resources also need to be improved and enhanced to compensate for the lost electricity production costs in the previous period. However, this must be carefully calculated so as not to affect the large repair and maintenance expenses and maintain stable operations of EVN.
- Thank you for sharing!
