Steel and Cement Businesses Unhappy about Electricity Price Hike

Mr Lai Quang Trung, Deputy General Director of Vinausteel ,a joint venture between Vietnamese and Australian steel companies, pressed that during this difficult period, while the government is taking many measures to remove difficulties for enterprises, electricity industry is considering increasing prices only for steel and cement industry, making it difficult for businesses operating in this sector.

 

He cited, "Currently, the centre of Vietnam's steel industry, Hai Phong, is witnessing many businesses close down. Typical are the four steel production businesses, one with the capacity of one million tonnes and the other three of rolled steel with the capacity of 60,000 tonnes, making more than 2,000 workers redundant and creating conditions for social evils to arise. I know in Hai Phong, four or five enterprises are now burdened with the unpaid debt of more than VND10 billion to the electricity sector. When electricity price is raised, enterprises are likely to have to close. Accordingly, the industry sector cannot collect electricity bill. Increasing input yet killing input contributors will lead to nothing in return."

 

Mr Nguyen Tien Nghi, Vice Chairman of the Vietnam Steel Association (VSA) also said: "I support the increase in electricity prices to recover losses of electricity sector. However, a roadmap has to be set out in compliance with real situation. In the current period, the increase of electricity price can do more harm than good."

 

In some past years, Vietnam had to import 70-80 percent of steel billet, which took a major amount of foreign exchange source. The government encouraged investment in steel production, the country now meets 100 percent of steel production in the country. This will not only reduce foreign imports but also create jobs. The increase of electricity price is against the government's encouragement, because this is the input industry of many areas of production. Moreover, currently, steel sector is facing many difficulties, if electricity prices increase, input of steel and cement will accordingly increase, yet output does not increase, even decrease, which will make it difficult for businesses and the economy, said Mr Nguyen Tien Nghi.

 

Mr Nguyen Van Thien, Chairman of the Cement Association said, "Enterprises should be considered equal. Why do those in steel and cement industries have to suffer from higher electricity prices? In fact, there is a paradox that the more one uses electricity, the more expensive it gets. In my opinion, we can do nothing about this paradox, but Vietnam Cement Association does not approve increasing electricity prices for steel and cement sectors."

 

Mr Thien pointed out that Vietnam’s cement price is lower than that of other countries in the region. In Vietnam, electricity accounts for 15-17 percent of the price of cement while this number in other Southeast Asian countries is only 10-12 percent. However, cement prices cannot be increased because if increased, it has to base on per capita income.

 

Mr Tran Viet Ngai, President of the Vietnam Energy Association affirmed, "If we don’t increase the price of electricity, power sector in particular and energy sector in general in Vietnam will face great danger."

 

The electricity sector in particular and the energy sector in general are encountering several difficulties. Investing increases yet makes losses. This year, the entire western region is totally using diesel, gas accounting for only 40 percent while diesel accounts for 60 percent. The price of 1kWh is up to VND4,000-5,000. If no investment and budget is properly taken to ensure sufficient power to develop, by 2020, it is difficult for Vietnam to become an industrial country.

 

"In my opinion, we must have a long vision of the country’s economy. To reach the goal of making the country a modern industrial one by 2020 when the level of production of all businesses and enterprises in the country is equal to that of other countries in the region, firstly, factories have to change technology and innovate materials. Deputy Prime Minister Hoang Trung Hai recently said that power master plan 7 went bankrupt, forcing the Ministry of Industry and Trade and Electricity Group to organise a workshop to assess experts’ opinion to recover this plan in 2014. In 2020, there will be 75,000 MW, equivalent to 367 billion kWh of electricity. Therefore, we should sympathize with the electricity sector," he said.

 

In the opinion of Mr Tran Viet Ngai, both cement and steel sectors have to soon renovate technology, restructure production and choose technology with lowest power consumption. The electricity sector in particular and energy sector in general should have big plans to prepare the way for the import of materials such as coal and gas. Currently, electricity is making loss. If the situation prolongs, not only one but several enterprises will likely go bankrupt. How to raise electricity prices is up to the State’s and the Government’s point of view. How to reach horizontal asymptotic value of the area or to make investment partly domestically, partly abroad? Power enterprises deal with EVN on the input, the output power is purely retail.