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Power monopoly should fix inefficiencies: auditors   2008-11-27 - TN, Agencies

 
 
EVN workers fix a power line. A recent audit of the corporation’s 2007 finances brings to attention inefficiencies that the firm should address prior to hiking electricity prices  
Audited results suggest the state-run power monopoly’s plan to hike retail electricity prices doesn’t hold water.

 

 

Electricity of Vietnam (EVN) should carefully consider all business factors before choosing to increase electricity retail prices, a State Audit official said Wednesday.

“They should carefully review issues such as electricity demand, supply and input costs,” Deputy Chief Auditor Le Minh Khai said in Wednesday’s interview with Thanh Nien Daily.

AUDITED RESULTS FROM EVN’S 2007 FINANCIAL REPORTS

Pre-tax profit: VND4.37 trillion ($264.85 million)

Revenues: VND58.2 trillion ($3.53 billion, or 29.57 percent higher than that of 2006)

Total assets: VND185.2 trillion ($11.2 billion)

EVN, the state-owned monopoly, controls all transmission grids and power retailers including Hanoi Electricity and Ho Chi Minh City Electricity companies.

It had recently submitted a plan to the Ministry of Industry and Trade proposing major increases in the retail prices of electricity. Under the proposal, electricity price would be increased by 15.5 percent for the production sector, and by 16 percent for the service sector.

The plan has been widely criticized by the public and private enterprises, which partly triggered the move to audit the corporation.

Consumers are duly concerned about the necessity of the proposed price hike after the State Audit report reveals the power company is making healthy profits despite high electricity losses and inefficient operation spending.

The firm’s electricity losses in 2007 amounted to 6.91 billion kWh, or 10.56 percent, exceeding the target by 0.06 percentage point.

Earlier, Chief State Auditor Vuong Dinh Hue had said EVN could save about VND1.4 trillion ($84.85 million) if it manages to reduce electricity losses to 8 percent by 2010 - as previously targeted in a project for the 2004- 2011 period.

Auditors said EVN could also have lowered expenses in 2007 by better managing personnel, equipment and materials.

Additionally, EVN has pumped investment into other businesses, but still complained about shortage of capital for electricity production which forced it to buy power from other local and foreign producers at higher prices.

The firm has invested VND3.59 trillion ($217.58 million), or 7.2 percent of its total capital, in other fields including telecommunications, banking, stocks and insurance.

“EVN should concentrate on electricity production rather than investing in other businesses which diverts capital from power production efforts,” Khai said, adding that the company has had to purchase electricity from other producers at VND70 per kWh higher than its production cost.

Auditors also emphasized that EVN failed to sell electricity to rural areas at the sanctioned price of VND390 per kWh, as farmers had to pay many times higher from purchasing through intermediaries.

Meanwhile, the power corporation had previously submitted a request to use parts of its 2007 profit to grant VND1 trillion ($60.6 million) in staff bonuses.

Deputy Minister of Finance Tran Xuan Ha later rejected the suggestion and lowered the amount to VND668 billion ($40.5 million).



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