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Several firms fined for using less power than minimum commitment in Vietnam's Quang Ngai

Several firms fined for using less power than minimum commitment in Vietnam's Quang Ngai

Monday, July 31, 2023, 18:42 GMT+7
Several firms fined for using less power than minimum commitment in Vietnam's Quang Ngai
Nguyen Anh Tam (R), director of Truong Thinh Processing Co. Ltd. in the Quang Phu Industrial Park in Quang Ngai Province, central Vietnam, cries for help as his company is fined for using less electricity than committed. Photo: Tran Mai / Tuoi Tre

Some enterprises in Quang Ngai Province, central Vietnam have been fined for using less electricity than the minimum volume committed in contracts with Quang Ngai Power Company.

Nguyen Anh Tam, director of Truong Thinh Processing Co. Ltd. in the Quang Phu Industrial Park in Quang Ngai, said on Sunday that “enterprises will get a fine for violating contracts if they use less electricity [than committed].

“Amid the power shortage, many localities have worked out rotational power cut plans to ensure safety and power supply, while my company was fined for using a smaller volume of power.

“This means Quang Ngai goes against the common policy."

Truong Thinh is a seafood processor, so its production depends on the volume of seafood caught.

That volume has been low recently.

“If the consumed power volume fails to exceed 50 percent of the committed figure in the contract, I will immediately receive a notice about the fine for violating the terms in the agreement with the power sector," Tam said.

"I was subject to a fine of over VND8 million [US$337] for several months.”

Enterprises have had to seek ways to survive due to the economic downturn over the past few years and his company is not immune, according to Tam.

The firm annually pays around VND5 billion ($210,669) for power for production. If the power company had calculated the consumed power volume on an annual basis, Truong Thinh would have surpassed the figure committed in the contract.

“The power company could have shared the difficulties with customers and considered the consumed power volume for the entire year,” Tam said.

He added that his company should have been hailed for using less electricity instead of facing fines as the whole country is calling for sparing the use of electricity.

Enterprises expect the power sector to share in their difficulties. Photo: Tran Mai / Tuoi Tre

Enterprises expect the power sector to share their difficulties. Photo: Tran Mai / Tuoi Tre

Tam proposed the power sector change its regulations to match the reality.

It is true that his company is wrong as it broke commitments in the contract but the electricity firm should be reasonable in levying fines, the businessman noted. 

Many other enterprises in Quang Ngai have faced the same fate as Truong Thinh Processing Co. Ltd.

The owner of another business said, “I expect the [power] supplier to share with customers. We do long-term business and need transformer stations, so we signed a contract with the power company."

Quang Ngai Power Company says it has reported customers’ proposal to calculate the consumed power volumes on a six-month or a-year basis to higher authorities. Photo: Tran Mai / Tuoi Tre

Quang Ngai Power Company says it has reported customers’ proposal to calculate the consumed power volumes on a six-month or a-year basis to higher authorities. Photo: Tran Mai / Tuoi Tre

In response, Phan Vu Dong Quan, deputy director of Quang Ngai Power Company, said the fines against enterprises using less electricity than committed were aimed at forcing them to take responsibility for their commitments and preventing the wastefulness of facilities invested in by the power sector.

There are many solutions for installing transformer stations.

Customers can register the installation of the stations with the power sector and pay for the installing costs, or enterprises make registrations and fulfill its commitments to the consumed power volumes, while the power sector spends capital on the investment and maintenance of transformer stations for electricity supply, Quan said.

Most enterprises choose to commit a consumed power volume and let the power sector invest in transformer stations.

Quang Ngai Power Company has to source the capital for such transformer stations from the state budget or commercial banks, according to Quan.

Banks required the company to prove the effectiveness of stations to offer loans. Therefore, the power company asked customers to calculate their estimated consumed power volumes a month so that the power company could install transformer stations with an appropriate capacity.

Many enterprises expect Quang Ngai Power Company to calculate the consumed power volume on an annual basis as they do not use an equivalent power volume in different months. Photo: Tran Mai / Tuoi Tre

Many enterprises expect Quang Ngai Power Company to calculate the consumed power volume on an annual basis as they do not use an equivalent power volume in different months. Photo: Tran Mai / Tuoi Tre

“If customers use less power than committed, that means the investment is inefficient. As a result, contracts between the two sides include the minimum consumed power volumes.”

The power company understands that customers do not use the same power volume in different months, so it requires the consumed volumes to be higher than half of the committed, Quan said, adding that they would face fines only if they consume less than half of the committed volumes.

Regarding enterprises’ proposal to calculate the consumed power volumes on a six-month or a-year basis instead of per month, Quan said Quang Ngai Power Company had sent the proposition to higher-level agencies.

“We are progressive and have analyzed customers’ opinions and have asked for higher authorities’ decisions. Quang Ngai Power Company will inform customers of the official decision,” Quan said.

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Thanh Ha - Tran Mai / Tuoi Tre News

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