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Higher gas prices may trigger power price hike
The Ministry of Industry and Trade has agreed in principle a proposal by PetroVietnam to raise the price of gas next month, which once gets the stamp of approval from the Government will likely trigger a rise in electricity tariff.
Under PetroVietnam’s proposal, the price of gas sold to power plants will be raised to US$2.98 per million BTU (British thermal unit) compared to the current price of US$2.0 per million BTU. That means the gas price this year will average out at US$2.65 per million BTU, forcing gas-fired power plants in the southern region to pay 1.8% more for gas, or around US$13 million per year.
If gas reaches US$3.55 per million BTU next year, electricity plants will pay 2.7% more, or US$20 million, per year.
The monopolistic gas distributor said that its profits from gas production and business in the Cuu Long basin are down. The profit margin in 2007 was over 20% but fell to nearly 19% last year and is expected to drop to around 10% by the end of this year.
Maintenance costs and infrastructure investment for gas plants have also surged. PetroVietnam is paying more to the State budget, from US$0.02 per cubic meter two years ago to US$0.05 and over US$0.07 per cubic meter in 2008 and 2009 respectively.
PetroVietnam is selling gas to large households in southern Vietnam at US$2 per million BTU for Cuu Long basin gas and US$3.48 for Nam Con Son basin gas. Gas exploited from the PM3-CAA zone is US$3.96 per million BTU.
Its subsidiary, PetroVietnam Gas Co., sells gas to Electricity of Vietnam (EVN) and Phu My and Ba Ria power plants in southern Vietnam at US$2 per million BTU but may raise the price following the new policy of the parent company.
The industry-trade ministry said that the mark-up is not high and conforms to the Government decision to raise the price of electricity within the 2009-2012 period. The Finance Ministry has also agreed to the new price.
The gas price increase will raise the operating costs of the country’s electricity producers by nearly VND240 billion over the last seven months of the year. The Finance Ministry has restricted any electricity price hike to a maximum of 8.92% against last year.
VietNamNet, SGT
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