Power firm has its back to the wall

illustration photo source:dantri

General director Zhang Yin Fu of the Ho Chi Minh City-based power company after a meeting with his clients at Hiep Phuoc Industrial Zone in the Saigon South last week concluded that the firm would maintain the same retailing prices, while waiting for the government’s final decision on its price-increasing proposal.

According to the proposal made during a meeting with the city’s people’s committee in early February 2011, the investor wanted to double its retail power price to 10 US cents from 5 US cents from April 1, otherwise,  the plant would likely be closed.

“We need to increase the price to offset our recent losses of up to $5 million per month. A 15 per cent power hike per kilowatt hour (kWh) in early March is still too low,” he said.

However, during its meeting with clients last week, the firm proposed to add 7 US cents to the current level as a surcharge while waiting for the government’s approval, but it was objected by the clients. “Our production cost has risen by 15 cents per kWh due to oil price hikes and PetroVietnam’s cutting gas supply to the company in the past several months. Furthermore, imported gas price was triple the domestic one and we can no longer afford to import,” Fu said.

According to Hiep Phuoc Power Company Limited, while power plants affiliated with the Electricity of Vietnam (EVN) enjoyed a subsidy from the government, the firm itself was given nothing.

According to the state-owned oil and gas group PetroVietnam, the aggregate supply of gas was just 20 million cubic metres per day, while the aggregate daily demand soared to a 23.1 million cubic metres.

Ho Chi Minh City’s People’s Committee has submitted the firm’s proposal to relevant ministries and the government to seek a solution, while the firm keeps supplying power at current prices with a possibility of increasing black-out frequencies.

Hiep Phuoc power plant, which is located at Nha Be district, has a total designed capacity of 675 megawatts. It supplies electricity to Tan Thuan Export Processing Zone, the Saigon South  area at large and Hiep Phuoc Industrial Park. 

Dinh Van Than, chief accountant at the Hiep Phuoc Industrial Zone-based Xuan Mai Paper Company Limited, said: “Current retail power prices seen at some companies based in the park are VND600 (2.8 cents) per kWh for low-time (10am-4am), VND2,000 (9 cents) for peak time (6pm-10pm), and VND1,100 (5.3 cents) for the rest of the day.”

“My company’s overhead expenses would soar by as much as VND800 million ($38,000) per month if Hiep Phuoc plant’s power hike plan is passed. Our plant failed to expand its production due to power shortage recently and if this situation prolongs, we will likely move to another industrial park, where power price is still subsidised by the government,” added Than.