Power company demands 300% price hike

The Hiep Phuoc Power Co., Ltd in Ho Chi Minh City is demanding a three-fold increase of the current power price by April 1 or else it will stop the supply of power. 

Electricians check a power grid in Ho Chi Minh City (Photo: SGGP)

Located in Nha Be District, the power company has officially informed enterprises in the Hiep Phuoc Industrial Zone that it will increase the power price to US17 cent per kWh from the current price of US5 cent per kWh from April 1. If any enterprise does not agree to the rate, the company will simply stop the supply of power from that day onwards.
 
Hiep Phuoc said it had faced a shortage of oil for producing electricity. To ensure sufficient power to enterprises in the industrial zone, the company reduced the volume of power sold to the Electricity of Vietnam (EVN) by half from March 19.
 
The company said it can only maintain power production until April 26 and its operation will depend on the enterprises’ acceptance of the increased rate and EVN’s timely payment of power dues.
 
Hiep Phuoc said that so far EVN owed it US$34 million in power costs.
 
Since early this year, Hiep Phuoc has often asked the Ministry of Industry and Trade, the Government Office and the HCMC People’s Committee for a hike in power price.
 
It said that either it would raise the price by three times or should be supplied with gas at a lower price to generate power.
 
Hiep Phuoc said the price of imported gas is thrice the domestic price while it was selling electricity for just US5 cents as regulated by the Government. As a result, the company suffered a loss amounting to US$120 million in the 2005-2010 periods.
 
At a meeting on March 21 with Hiep Phuoc and the industrial zone, the state-owned Petro Vietnam Gas Corp (PV Gas) said that it didn’t have gas to sell to Hiep Phuoc.
 
Hiep Phuoc said that if not many enterprises in the Hiep Phuoc Industrial Zone agreed to the new rate, it would completely halt the supply of power to the zone from April 26.
 
Enterprises raise concern
 
A manager from Hung Long Phuoc Manufacture and Construction Joint Stock Company said the power hike would have a great impact on the company’s business if power costs go up 150 percent.
 
Pham Van Dung, director of Xuan Mai Paper Co, Ltd., said his company can’t maintain operations at such a high rate because its overhead expenses would soar by as much as VND600 million (US$28,500) per month.
 
The Southern Fertilizer Joint Stock Company said the hike in power price will affect the cost price of its products, even though fertilizer is included in goods that are price-stabilized under the Government polices.
 
Solutions
 
The city’s Industry and Trade Department said on March 22 that the power price hike would help Hiep Phuong offset losses, but it will cause concern to enterprises.
 
The department said that for the time being, the HCMC People’s Committee should subsidize Hiep Phuoc, and for the long term, the Industry and Trade Ministry should ask the Vietnam Oil and Gas Corporation to supply gas to Hiep Phuoc. However, Hiep Phuoc should also use imported liquid petroleum gas (LPG) to produce electricity to reduce production costs.
 
The Industry and Trade Ministry’s Electricity Regulation Department said it has asked EVN to replace Hiep Phuoc for selling power to the Hiep Phuoc Industrial Zone, the Tan Thuan Export Processing Zone and the South Saigon Urban Area as request by Hiep Phuoc. 

By Hoang Liem – Translated by Gia Bao

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