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EVN slammed for fat bonus appeal despite loss claims
Electricity of Vietnam (EVN) repeatedly proclaims its losses and lack of investment funds, but does not shy away from asking for huge bonuses to its staff, a National Assembly deputy said in a rebuke to an EVN request.
In early 2007, the monopoly power provider, saying it was short of funds and selling under the market price, had persuaded the government to approve its price increase plan and was advised by the Prime Minister to invest all the money from the price increase in developing infrastructure for power projects.
The price had increased in early 2007 to an average VND862 (5 cents) per kWh from VND787 per kWh in 2006.
But recently EVN asked to use VND1,002 billion (US$60.6 million) – more than a third of its 2007 profit – as bonuses to its staff.
In a financial report submitted to the Ministry of Finance and the Ministry of Industry and Trade, EVN asked for the bonuses to be extracted from its 2007 profit of VND2.76 trillion ($167.5 million), saying it cannot calculate exactly which is the money from the price increase.
The bonus is necessary because “the interests of 84,000 EVN’s workers nationwide needs to be considered,” EVN said, noting that to save all the profit for power industry investment is not in keeping with the country’s regulations on corporate income.
Deputy Minister of Finance Tran Xuan Ha rejected the suggestion and scaled down the bonus to VND668 billion ($40.5 million).
The remainder will be added to the national fund for development, Ha said.
Le Danh Vinh, deputy minister of Industry and Trade, meanwhile refused the request outright, calling for EVN to obey the prime ministerial instruction.
The ministry has required EVN to clarify how it has calculated its 2007 profit at VND2,763 billion as it’s illogical that the utility cannot figure out the part of profit that has resulted from the price increase.
Last year EVN made a profit of around VND3.8 trillion ($231.65 million) before paying taxes, according to the group’s report. The group had anticipated a loss of more than VND4 trillion ($241 million) if it had not been for the price increase.
The request for such a bonus by EVN – a large corporate entity receiving much from state budget – is incomprehensible considering the country’s interest, said Tran Van, standing member of the National Assembly’s Budget and Finance Committee.
EVN – a monopoly – has always complained about its losses and lack of capital for investment due to the low prices fixed by the government.
The corporation had even cited these reasons for its inability to carry out 13 projects assigned by the government.
On October 6, EVN submitted a plan to the Ministry of Industry and Trade to further increase the average price in 2009 to VND1,017 per kWh, VND1,088 per kWh in 2010, and VND1,146 per kWh in 2012.
The Ministry of Industry and Trade has asked EVN to draw up a plan with the ministry and other state agencies, setting the rate, timing and implementation of the increase.
EVN needs the increase for extra capital to invest in projects entrusted by the government, said Minister Vu Huy Hoang.
Dinh Quang Tri, deputy general director of EVN, said without an increase EVN would not be able to invest in power generation to prevent widespread shortages.
Vietnam’s power demand is expected to grow annually by 16 percent until 2015, according to EVN estimates.
The entire power network in Vietnam has an output of 10,000-11,000 megawatts, about 1,500-2,000 megawatts below demand during peak hours, EVN said.
Repeated power cuts have been causing headaches to residents as well as firms over the past four months.
EVN has cited technical problems at major power plants and rapid growth in demand as main reasons for the blackouts.
The average electricity usage per person in Vietnam in 2007 was only 785 kW, standing seventh among eleven Southeast Asia nations, 40th out of 49 Asian countries and 134th out of 192 countries and territories in the world.
The domestic consumption figure does not even approach one third of the world’s average per capita electricity allowance, which was 2,516 kW in 2003.
EVN only provides 60 percent of the country’s electricity and still depends on outside sources, Huynh Van Thach, deputy chief of EVN’s Planning Department, told a July conference held by the Ministry of Industry and Trade.
The utility has apologized, but no matter what the excuses are, EVN should take the blame, said Deputy Prime Minister Hoang Trung Hai.
“Its job is to provide electricity,” Hai said. “It isn’t enough to just apologize and make the lives of residents and businesses miserable.
Thanhnien
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