MoIT’s new decision benefits gas producers
The competitive electricity generation market (CGM) was launched in July 2012 to persify power sources, reduce the country’s dependence on hydropower plants and make the power market more competitive.
MoIT Decision No 3698/QD-BCT that took effect on October 1 suspends the CGM operation to maximise the consumption of gas-based power production, thus benefiting gas power producers at least in the fourth quarter, according to HCM City Securities Co (HSC).
Until now, the Electricity of Vietnam (EVN) bought power from plants through bidding competitions based on the plants’ costs. EVN will now buy power from the plants based on the prices stated in the power purchase agreements (PPAs) it signed with power producers.
For thermal power producers, the PPA price is calculated on the fixed cost plus operation and maintenance costs, varying cost and material transportation cost.
The PPA price for thermal power plants would be higher than the average CGM price. However, the volume of power EVN purchases from those plants will be lower once EVN gives priority to gas power products, thus making earnings of those producers decline, HSC said.
For hydro and gas power plants, the PPA price is calculated by the fixed cost plus operation and maintenance costs.
Of the two types of power producers, HSC assumes hydro power plants would suffer as they have the lowest production cost, pulling the PPA price below the CGM average price by 20-30%. EVN will also buy less from hydro power plants, therefore, their income will be badly affected, HSC said.
The gas power producers that could benefit from the decision are PetroVietnam Power Nhon Trach 2 JSC (Nhon Trach 2), Ba Ria Thermal Power JSC and PetroVietnam Power Company (PV Power), HSC added.
Nhon Trach 2 is running a gas power plant with capacity of 750 megawatts (MW). The decision could increase the plant’s fourth-quarter production by 25% year on year to 1.5 billion kWh.
Vietnam’s biggest operator of gas power plants, PV Power, is managing the operation of three gas power plants. Two of its plants - Nhon Trach 1 and Nhon Trach 2 plants - used to sell 15-20% of their production on the CGM.
Nhon Trach 2 contributed 60% of post-tax profit in 2016 for shareholders of the parent company PV Power. PV Power earned VND1.6 trillion (US$71 million) in net profit last year.
Ba Ria Thermal Power Company is running a gas power plant with capacity of 388.9 megawatts. Shares of those companies are expected to rise in the near future.
Ba Ria Thermal Power Co and Nhon Trach 2 are listing their shares on the HCM Stock Exchange under code BTP and NT2, respectively.
BTP stocks rose 1 percent in the last two sessions to end October 12 at VND10,700 (US$47.5 cents) per share and NT2 has jumped 25% in the last one month to close at VND29,000 per share.
In addition, PV Power is expected to make its initial public offering (IPO) in December 2017 and the prospects of higher earnings could make PV Power’s shares more attractive, HSC said.
Related News
Ministry calls for stable supply of coal
19:29 | 06/03/2023 Import-Export
MoIT announces 218 firms as prestigious exporters
19:37 | 05/12/2022 Import-Export
MoIT asks EU to remove EO controls on instant noodles
18:42 | 07/11/2022 Import-Export
MoIT works with central bank to support petroleum enterprises
17:41 | 30/10/2022 Headlines
Latest News
Saigontex 2023 attracts over 1,300 domestic, foreign businesses
14:01 | 06/04/2023 Import-Export
Mong Cai international border gate sees strong recovery
16:15 | 05/04/2023 Import-Export
Vietnam a potential market for French businesses, investors: experts
16:12 | 05/04/2023 Import-Export
Import and export turnover across Cao Bang prospers but still exists difficulties
10:25 | 05/04/2023 Import-Export
More News
Cashew industry strives to "get on the shelves of world supermarkets"
10:24 | 05/04/2023 Import-Export
HCM City’s industrial production index down 0.9% in Q1
14:47 | 04/04/2023 Import-Export
Fisheries exports estimated at 1.85 billion USD in Q1
14:45 | 04/04/2023 Import-Export
Quang Ninh aims to attract quality FDI inflows
14:43 | 04/04/2023 Import-Export
Exports face many difficulties
13:29 | 04/04/2023 Import-Export
Manufacturing enterprises increase their competitiveness thanks to digital transformation
13:28 | 04/04/2023 Import-Export
32nd Việt Nam Expo promises to boost business linkages
14:19 | 03/04/2023 Import-Export
Prevention of price risks before news that Indonesia increases rice imports in reserve
09:52 | 03/04/2023 Import-Export
Japanese investors highly appreciate Vietnamese property market
17:41 | 02/04/2023 Import-Export
Your care
The system has not recorded your reading habits.
Please Login/Register so that the system can provide articles according to your reading needs.
Saigontex 2023 attracts over 1,300 domestic, foreign businesses
14:01 | 06/04/2023 Import-Export
Mong Cai international border gate sees strong recovery
16:15 | 05/04/2023 Import-Export
Vietnam a potential market for French businesses, investors: experts
16:12 | 05/04/2023 Import-Export
Import and export turnover across Cao Bang prospers but still exists difficulties
10:25 | 05/04/2023 Import-Export
Cashew industry strives to "get on the shelves of world supermarkets"
10:24 | 05/04/2023 Import-Export