State power giant reports US$32 million loss, blames stronger yen
Power monopoly Electricity of Vietnam has reported losses of nearly VND717 billion ($32 million) in the first half this year, saying the stronger Japanese yen has increased its loan burden.
The latest financial report from Electricity of Vietnam said its revenue increased 17.25% in the first six months of 2016 from the same period last year to nearly VND130.7 trillion (US$5.85 billion).
But at the same time, overheads such as interest on loans, transactions and commission fees and insurance almost doubled to VND15.46 trillion (US$692 million).
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Dinh Quang Tri, deputy CEO of the power giant, said: “The specific cause of the loss was the stronger yen.”
Tri said the company would have made a profit if it had not lost VND6.37 trillion (US$285 million) due to the value of the yen increasing 17% this year.
According to a report from the government, EVN topped the list of state firms with foreign debts at the end of 2014. The group borrows a lot under Japan’s development assistance programs.
One of its big units, the Power Generation Corporation 1, now owes US$301 million in yen, local media has reported. Hoang Quoc Vuong, deputy minister of Industry and Trade, said EVN’s huge loss will put pressure on power prices and the government might have to "adjust" those prices at some point.
But according to economists, losses due to foreign exchange changes are not a reasonable excuse for price hikes.
Economist Vu Dinh Anh said that any business that takes out foreign loans should be prepared for foreign exchange fluctuations with provisions to prevent price changes.
He said if EVN wants to raise prices, it needs to provide a detailed report that outlines all related income and expenses.
“The report needs objective assessment. Currently, EVN’s reports are only reviewed by the Ministry of Industry and Trade and that is not convincing,” he said, as cited by Tuoi Tre (Youth) newspaper.
EVN made a profit of nearly VND890 billion (US$40 million) during the first half of 2015.
But as of the end of June, the company owed banks more than VND475 trillion (US$21.3 billion), and was paying more than US$1.7 million in interest a day, according to the report.
Loans guaranteed by Vietnam’s government reached US$26 billion at the end of 2015, and EVN accounted for 37.3%of the total.
