Diverse investment to up EVN’s role

22:57' 25/04/2008 (GMT+7)
VietNamNet Bridge – Electricity of Viet Nam (EVN)’s investment in other industries outside the electricity sector is aimed at compensating for a shortage of financial sources for electricity investment, said Dao Van Hung, Head of EVN’s management board.
He made the comments following criticism of EVN’s operations as a monopoly and its expansion to areas outside the electricity sector.

Hung was referring to EVN’s investment in telecommunications and banking, while the corporation was assigned by the Government as the key electricity investor and supplier in Vietnam.

"Corporations have to implement the State’s socio-economic development strategy," said Hung.

"In the current context of a high inflation rate, the Government asked that the prices of essential goods does not increase, and this has led to an imbalance in our expenditure and revenue, especially after input material costs increased.

"To compensate for this imbalance, corporations have to do business in other industries which are allowed to and earn high profits such as banking and real estate."

Hung affirmed that EVN has not invested more than 2% of its total charter capital in other industries, and that the legality and prospect for profits were carefully considered for any investment.

EVN’s investment in other industries has been questioned, as while the corporation invests in outside sectors, they also claim to lack enough capital for major investment in new electricity sources, such as new power plants.

Experts and economists have argued against EVN’s monopoly as the role of single buyer and single seller of electricity.

EVN currently has a monopoly in all four parts of the nation’s electricity sectors, including electricity generation, transmission, distribution and regulation.

Senior economist Le Dang Doanh argued that currently, there’s no effective way for people to calculate EVN’s production cost for one KW/h.

Doanh urged for the establishment of a monopoly supervision organisation, which ensures for transparent operation of monopoly corporations.

While considering the corporations’ multi-industry investment as normal, Doanh urged for EVN to only invest in outside projects after they were more effectively carrying out their primary role.

"EVN was established to be responsible for the nation’s electricity generation and distribution but not to invest in other industries," said Doanh.

"The Government and National Assembly have to push EVN to report on the effectiveness of their investment in terms of playing their main role."

Serious electricity shortages during the past months were also attributed to the slow progress on completing several electricity generation plants, including Ca Mau and Uong Bi thermo-electricity.

"Someone must be responsible for the slow progress on completing the plants," said Doanh.

"Why do people complain about late trains and late buses but there’s no criticism for late electricity?"

EVN deputy general director Dinh Quang Tri said that although EVN, the major investors of these projects, will treat violations according to the contracts, it’s necessary to have co-operation between investors and bidders to tackle problems related to completing the work on time.

"I think it doesn’t help to mete out punishment when the project is being carried out as the most important target is the fast completion of the project," said Tri.

Nguyen Quang A, Head of the Institute for Development Research said that electricity shortages and lack of proper investment could only be solved after the monopoly is broken.

Tran Viet Ngai, President of Viet Nam Energy Investment Association and former EVN General Director said he had put forward proposals on how to tackle the EVN monopoly issue to the Government many times.

"In my opinion, it’s urgent to establish an independent corporation responsible for electricity transmission," said Ngai.

"The regulator must be completely assigned to the Ministry of Trade and Industry’s Electricity Regulatory Authority of Vietnam."

The issue of EVN’s shortage in electricity supply has become more pressing than ever as there have been many blackouts in both households and production sectors during the past weeks. EVN even predicted a more serious shortage in the coming months.