The ministry is tasked with instructing Vietnam Electricity Group (EVN) to refine a comprehensive report on power generation, costs and selling prices in 2016 and work out a similar plan for 2017. The ministry should cooperate with the Ministry off Finance and relevant agencies to propose power price management scenarios for this year based on the plan to support socio-economic stability.

These are the key points of an announcement issued by the government Office to convey deputy prime minister Vuong Dinh Hue’s conclusion at a meeting held in late February on power generation and trading and costs in 2016 and 2017 as well as solutions to exchange rate issues related to EVN’s foreign currency loans.

The deputy PM underscored the importance of reviewing and adjusting power output and sales targets and power loss in 2017, as well as ensuring sufficient supply for business and household consumption and economic efficiency.

The industry ministry should tell EVN to reconsider its investment and capital mobilisation schemes, and calculate power generation costs and tariffs in 2017. The group should find ways to cut power losses and its regular expenditures by 7.5-10 percent.

EVN must build power tariffs based on projected prices of coal and gas, and the impact of the exchange rate between the US dollar and dong on its foreign currency-based investments.

It is compulsory for EVN to review power buying contracts, particularly those with independent power producers (IPPs) and build-operate-transfer (BOT) projects, as well as find or propose solutions to lingering problems. These solutions should go before the prime minister this May.

The Ministry of Labour, Invalids and Social Affairs is told to work with the industry ministry to review and revise wage and benefit policies for employees of EVN in a way that helps increase productivity and restructure the workforce of the group to enable it to perform better.

Power tariffs were adjusted up to just VND1,622 per kWh in March 2015, increasing 7.5 percent over the period earlier.

At a recent meeting on tasks in 2017, EVN pointed out a string of challenges this year related to fuel supply for power stations, especially a large volume of gas needed for generation of around 600 million kWh after the operation of Ca Mau gas processing plant. As a replacement, more oil will be used to generate nearly 2.2 billion kWh, eating into the group’s finances.

Input costs of power generation have inched up since 2015 but EVN has not been allowed to hike power tariffs. Moreover, the coal price rise by 7 percent on December 24 last year will lead power generation costs this year to rise by roughly VND4.7 trillion.