EVN expects to lose $1.27 bln this year

State utility Vietnam Electricity (EVN) expects a loss of about VND31,360 billion ($1.27 billion) in 2022 due to increased production costs driven by the increase in coal, oil and gas prices.

EVN said that from the beginning of the year, due to fluctuations in fuel prices in the world, the cost of electricity production and purchase has surged.

"Given the fuel price movements in the first months of the year and the power system operation plan approved by the Ministry of Industry and Trade, the group may lose up to VND64,805 billion ($2.62 billion)," it said.

However, since the beginning of the year, EVN has saved 10% on regular expenses; reduced the cost of fixing fixed assets by 20-30%; temporarily paid staff salaries equal to 80% of the average salary in 2020; and strengthened the management of electricity generation costs.

In addition, EVN has implemented solutions to optimize cash flows and hydroelectricity generation with low cost, and prioritized cheaper coal sources to reduce power generation costs, thereby reducing loss by about VND33,445 billion ($1.35 billion).

Previously, EVN had reported a consolidated loss of VND16,586 billion ($701 million) in the first six months of the year.

In the context of the current financial situation, the company believes that there will be many difficulties this year and the following years in terms of cash flow balance, large repair costs, capital mobilization, and capital balance.

Meanwhile, according to the latest forecast of international organizations, the world fuel price in 2023 would not tend to decrease to the average level in 2021. Therefore, EVN expects it will continue to face many difficulties in terms of production, business and financial balance. At the same time, the proportion of low-cost power sources like hydroelectricity would decrease.