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Deputy PM urges EVN & MoIT to conduct Gencos' equitization during Q3

Released at: 18:54, 27/04/2017

Deputy PM urges EVN & MoIT to conduct Gencos' equitization during Q3

Photo: VGP

Deputy PM calls on power producer to make equitization of power generation corporations a reality.

by Duy Anh

Deputy Prime Minister Vuong Dinh Hue, who is also Head of the Central Steering Committee for the Innovation and Development of Enterprises, urged the Ministry of Industry and Trade and Electricity of Vietnam (EVN) to conduct the equitization of the latter’s power generation corporations during the third quarter of this year.

In a working session on April 26, the Deputy PM asked EVN to actively review and list the group’s loss-making projects in accordance with market principles, balance cash flows in production and trade, apply modern technology in management, reduce labor costs, reduce energy consumption, and ensure transparency in calculating electricity prices, reducing the price by at least 10 per cent.

In regard to input costs, Deputy PM Hue requested that EVN prepare different scenarios for retail electricity prices during 2016-2020 and the management mechanism for electricity prices during the period and for 2017.

He urged EVN to determine the electricity price for 2017 with prudence, ensuring appropriate returns and creating the grounds to attract investment and ensure energy security, in particular attracting investment in renewable energy sources like wind and solar.              

EVN owns all capital in three major power generation corporations and plants that play an extremely important role in the country’s socioeconomic development and national security.

It also owns 100 per cent of the National Power Transmission Corporation and five other corporations that manage power distribution, trading, and market operations.

In an interview last month, Mr. Dinh Quang Tri, Deputy CEO of EVN, said the Power Generation Corporation 3 (Genco 3) will undergo its equitization process this year and Genco 1 and 2 in 2018. As per the Prime Minister’s approval, it will equitize the three Gencos in two phases.

In the 2016-2018 period, the Gencos will remain under EVN’s management, with the group holding at least 51 per cent. In 2019-2020, the group will consider reducing its controlling stake, and two years after equitization the Gencos will cease to be EVN subsidiaries.

The Gencos are currently having difficulties investing in power projects, Mr. Tri said. The group has submitted a restructuring plan to the PM, under which they can sell part of their equity in power generation companies to improve financial capacity and ensure a debt-to-equity ratio of less than three, as per the law. This would help EVN and the Gencos ensure reciprocal capital for attracting investment into new power projects.

EVN has also suggested that the PM allow the Gencos to put up shares worth more than half of their charter capital in their IPOs. If those shares are not sold, EVN would continue to hold a controlling stake in the corporations and divest at a later date.

In August 2014, the Ministry of Industry and Trade approved initial plans to equitize Genco 3, with a valuation to be conducted by January 1, 2015. The plan aimed at conducting an initial public offering (IPO) in March 2016 and then hold its first shareholders’ meeting a month later.

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