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Power shortages remain a thorny issue
Duong Quang Thanh, Deputy General Director of the Electricity of Vietnam Group (EVN), has affirmed that prolonged power shortages do not result from the group’s scattered and inefficient investments, but stem from a lack of funding for power projects.
Mr Thanh gave an insight into the situation during an interview granted to VOV.
VOV: Is it true that EVN has invested in power projects in a scattered and inefficient manner?
Mr Thanh: First of all I want to confirm that all EVN-implemented projects have been approved by the Prime Minister. We have also carried out power projects at the request of provinces provided that they were approved by the Ministry of Industry and Trade. In brief, EVN has invested in many key power projects to meet the increasing demand of the national economy and localities.
VOV: To ease serious power shortages, EVN has no choice but to develop new projects. However, the group finds it difficult to access bank loans. What will you do to solve the problem?
Mr Thanh: We are faced with many difficulties in mobilising more than VND9,000 billion for power projects, including those scheduled for operation this year. We have reported the problem to the Prime Minister and hope that part of the total amount will be disbursed to keep our projects up and running by the end of this year.
VOV: How does the lack of funding affect the supply of power and what is your solution?
Mr Thanh: Surely, this will delay the implementation of projects which normally depends on weather conditions (dry or rainy). Any delay will make power shortages in the next two years (2009-2010) become ever more serious.
Therefore, we are planning to equitise several operational power plants by the end of this year to mobilise funds for these projects. We will also establish joint stock companies to mobilise capital from domestic and foreign businesses interested in power projects. EVN will submit to the Prime Minister some draft projects under which it holds only 30 percent of stakes.
VOV: Do you think that investing in non-power areas has resulted in capital shortages and slow progress in implementing power projects?
Mr Quanh: To date, investment in non-power areas has made up only 1.48 percent of the group’s total charter capital. This means priority is always given to power projects, as they need a large amount of capital. Earlier this year, we did invest in agricultural production, banking, stock market and insurance services in the hope of mobilising capital from these sectors for power projects. Banks have so far lent EVN more than VND2,000 billion for power projects.
VOV: Do you think it is risky to invest in these sensitive areas?
Mr Thanh: We have poured a very small amount of money into the stock and insurance markets. For instance, we have invested approximately VND100 billion in the stock market alone with high hopes for a good return on our projects from securities companies. Generally speaking, we have only focused on the areas from which we can quickly recoup our investments at a profit.
VOV: Currently, many economic groups are heavily indebted. What about the case of EVN?
Mr Thanh: Our debt balance currently stays at VND83 trillion, or 53.5 percent of our liquidity. For economic groups and State corporations, the benefit-to-risk ratio of 60 percent is acceptable. Our ratio also meets the World Bank’s standards for loans invested in power projects. However, if the price of electricity is not adjusted, the ratio between the amount of debts and that equity capital will be widened.
VOV
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