This December, two electric power plants, Thac Ba and Pha Lai, will be listed on the stock market to sell their shares to investors outside the two plants. However, an electricity market, which benefits consumers, has yet to be formed.
Opening close equitisation
With four of the six electricity companies equitised and listed on the stock market, the Ministry of Industry and the Electricity Corporation of Vietnam (EVN) have shown their determination to settle difficulties in enterprise evaluation, which have hampered the equitisation processing in the industry.
Three companies, including Vinh Son-Song Hinh, Pha Lai and Thac Ba, have decided to sell their shares on an auction basis at the Hanoi and Ho Chi Minh City securities trading floors.
The starting price of each share is put at VND 10,200 for shares of the Pha Lai Thermo-electric Power Company, and VND 10,800 for shares of the Thac Ba Hydro-electric Power Company.
According to experts, these prices are so soft that anyone who wants to contribute their capital to the industry, which has been so far considered as monopolised industry, can buy shares.
The Thac Ba Hydro-electric Power Company has experienced a change for the better despite many difficulties. After many failures, the company was finally evaluated at VND 635 billion.
During its preparation for an equitisation, the company faced many difficulties due to a lack of current assets and degraded its generation units. However, EVN gave it a hand by signing contracts with foreign organisations on restoring and upgrading the company’s generation units with a total capital of tens of millions of US dollars.
After this great change, it is possible the company will experience a close equitisation as after being beefed up with huge investment capital, it will become profitable and its expected profits will be high.
However, Dai Ngoc Giang, director of the Thac Ba Hydro-electric Power Plant, affirmed that in December 2005, the company would sell its shares to outside investors, who would hold 24.23 per cent of the company’s charter capital, or VND 153.86 billion. He went on to say: “In the near future, we will sell more shares to outside investors even though we know that we will have to strive for more attractive dividends to attract more capital.”
According to EVN, so far, the electricity industry has 40 equitised enterprises. Equitisation for being listed on the stock market has been considered by EVN as one of the solutions for a formation of a real electricity market, thanks to which the companies will be able to attract social resources to develop their production activities.
In two auctioning sessions of shares of the Vinh Son-Song Hinh and Khanh Hoa Electricity Company on the Hanoi Securities Trading Centre, total investment capital was put at VND 490.52 billion, VND 31.808 billion higher than the face value of the two companies’ shares.
EVN has considered it a success of its equitisation, making a significant contribution to the development of the Vietnamese stock market because transactions of the two companies’ shares occupied over 90 per cent of the volume of shares traded in the Hanoi Securities Trading Centre.
When the Thac Ba and Pha Lai Companies are listed, a ‘mini’ electricity market will certainly be heated on securities trading floors.
Early formation of an electricity market?
Bui Thi Hang Nga, expert of the EVN Board for Enterprise Renewal, said that equitisation was an important step for the formation of an electricity market. EVN had developed a roadmap for the market, which consisted of three stages.
Accordingly, EVN will promote competition in electricity generation, which means competition among electric power plants. It will also partly allow the competition in wholesale distribution. Concretely, those enterprises which buy a large volume of electricity will be able to choose the enterprise which will supply their electricity. Finally, an optimal distribution market will be formed and customers will be able to buy electricity directly from various electricity grids and they are allowed to choose their electricity suppliers.
According to experts, this is a long-term vision and it will take Vietnam a long time to reach such a goal. The equitisation and listing of six enterprises on the stock market is a signal of the initial formation of the local electricity market.
Many people share the same idea that EVN member enterprises remain reluctant to equitise and their sale of 30 per cent of their shares on the stock market is not enough to create a driving force for a quick formation of the electricity market, which will produce a direct impact on the price of electricity and consumers’ right to seek their supplier.
This means that consumers are eager for the formation of a healthy electricity market.
B.T
Vietnamese
