The Ministry of Industry and Trade told a press briefing on Friday that it had floated a plan to increase electricity tariffs and would submit it to the prime minister to help state utility Vietnam Electricity Group (EVN) cut its huge losses.

In 2022, EVN racked up a loss of over VND26.2 trillion (US$1.1 billion), while the last price adjustment took place four years ago, heard the press conference held by the ministry to announce the results of an inspection into the state company’s costs of power generation and trading operations.

The inspection was jointly conducted by the representatives of relevant ministries, the Vietnam Fatherland Front Central Committee, the Vietnam Consumer Protection Association, and the Vietnam Chamber of Commerce and Industry.

Power production costs spiral up

The results indicated that EVN’s electricity production costs totaled VND419 trillion ($17.9 billion) in 2019, and VND493.3 trillion ($21 billion) in 2022.

Besides, the electricity price for production stood at VND1,859.90 per kilowatt-hour in 2021, up 1.84 percent against 2020, while the price in 2022 rose 9.27 percent at VND2,032.26 per kilowatt-hour against the previous year.

Meanwhile, the retail price of power in 2022 was VND1,882.73 per kilowatt-hour, up 1.46 percent against 2021, leading to a loss of some VND36.3 trillion ($1.5 billion).

However, the group’s revenue reached VND10.1 trillion ($430.6 million) last year, thereby offsetting the loss.

As a result, EVN suffered a loss of more than VND26.2 trillion ($1.1 billion) in 2022.

Some costs, including exchange rate differences in power purchase contracts, have yet to be factored into its 2022 power production price, according to the results.

Tran Viet Hoa, head of the Electricity Regulatory Authority of Vietnam, said that retail price adjustment was based on input costs.

Under the prevailing regulations, if input costs increase or fall three percentage points or more, electricity prices could be adjusted accordingly.

However, power prices make a significant impact on the macro-economy and daily life, so it is necessary to weigh on the hike carefully.

Exchange rate difference reported at VND14.7 trillion ($626.7 million)

“EVN and designated agencies have built an electricity pricing plan and will report it to the prime minister for an appropriate solution to ensure the benefits of EVN and the macro-economic stability,” said Hoa.

Nguyen Xuan Nam, deputy general director of EVN, told Tuoi Tre (Youth) newspaper that if a power price hike was not enforced, the loss would increase the firm’s financial burden.

“The loss reported in 2022 was attributed to high input costs. The prices of coal soared three-fold, or even five-fold, while the double prices of natural gas and oil also contributed to the spike in input costs,” said Nam.

However, over the past four years, retail power prices have yet to be elevated, plunging EVN into losses, he added.

Due to the hardship, EVN has applied multiple cost-cutting measures, apart from reducing repair and maintenance expenses by up to 30 percent.

Thanks to the reduction in spending, plus revenue, its loss was lowered to VND26.2 trillion ($1.1 billion).

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