EVN says financial crisis to continue this year on inadequate tariff hike

A state-owned company that is both tasked with being profitable and ensuring energy security, it is struggling financially as production costs exceed price, Nguyen Xuan Nam, its deputy CEO, said at a meeting Tuesday.

In far-flung locations such as islands and mountains, costs can surge to VND7,000 per kilowatt-hour while consumers only pay around VND1,900, he said.

"We have to accept selling electricity for a loss to ensure energy security."

Retail electricity prices were hiked by 3% in May, but the rise was marginal compared to the surging costs, he said.

Coal, for instance, cost as much as US$400 per ton last year, five times the price in 2021. As it accounts for 84% of electricity production costs, EVN posted a loss of VND26.2 trillion for the year.

In the first eight months of this year its losses have exceeded that figure to reach VND28.7 trillion.

Coal prices have dropped to around $220, still high, while oil prices have risen 150% to $93 per barrel.

Exchange rates have also added to EVN’s burden as the dollar has been gaining steadily against the dong.

The company therefore wants regulations changed so that currency exchange rate differences and losses can be factored into retail prices.