Loss-making EVN justifies why subsidiaries have huge bank deposits

State utility Vietnam Electricity (EVN) has said its member companies maintain vast deposits in domestic banks in order to ensure trust with business partners and pay due debts.

The explanation is the electricity giant’s response to questions raised in late May by some parliament members about why the parent corporation is suffering huge losses but its subsidiaries have tens of trillions of Vietnamese dong in the bank (VND1 trillion = $42.58 million).

EVN had earlier reported its total 2022 losses at more than VND26 trillion (over $1.1 billion).

For its subsidiaries, EVN explained that it is necessary to look at their debts, especially short-term debts, at the same time. Their short-term debts total about VND60.05 trillion ($2.55 billion), the giant said.

Subsidiaries also need to pay suppliers, and invest in power distribution and retail networks, as well as cover production and business costs.

At a press briefing on May 26, Dang Hoang An, Deputy Minister of Industry and Trade, explained the way EVN operates in the Vietnamese electricity market as a state utility.

He said EVN buys electricity based on a mechanism that prioritizes prices. This basically means the utility will opt for the cheapest option first. He added that EVN will purchase all forms of electricity such as hydropower, coal, gas, oil, and renewables as long as there are contracts in place.

The deputy minister said EVN sometimes has to pay more for power than the price it passes on to users, causing losses. EVN’s prices are controlled by the government, and this governance aims to ensure national power security, he added.

On May 4, EVN raised the country’s averageretail electricity price by 3%, the first hike since March 2019, following approval from the Ministry of Industry and Trade.

Prime Minister Pham Minh Chinh, in a dispatch issued on Tuesday, requested urgent measures to ensure power supplies during this dry season and beyond. He assigned the ministry to form an inspection team to examine power supply management at EVN from January 2021 to June 1, 2023.