In 2017, the total investment capital needed for construction projects is estimated at VND 137,071 billion (meanwhile the same figure of 2016 was VND 132,536 billion).
Although the list of hundreds of ongoing or planned projects seems to be overloaded, these projects are to realize the target at sufficient electricity security for the country, particularly when Vietnam has been promoting foreign investment attractions and start-ups become increasingly vigorous.
Mr. Dinh Quang Tri, Vice President of EVN said that in order to ensure a sound financial performance, EVN can only count on two sources: power sale revenues and financing arrangements.
Accordingly, power sale revenues are to enable normal operation, production and business activities, and financing arrangements aim at power generation growth to satisfy power needs for development.
“Every year, EVN requires an investment capital amount of about USD 5 - 6 billion and we have a lot of projects with investment costs of more than VND 10,000 billion each, consequently the Government’s guarantees for EVN’s loans in the current financial situation of EVN will be absolutely necessary”, EVN does hope that the financing arrangements will be performed satisfactorily to accelerate implementation schedules of generation and network projects.
From another perspective, EVN’s leaders stated that ODA financial sources granted for EVN last only until 2019, after that merely commercial loans are available. “Therefore, financing arrangements to meet the investment requirements of EVN will be surely more challenging”, said by Mr. Tri and he added that in EVN’s restructure program, objectives have been set forth by EVN’s leaders so that EVN’s subsidiaries shall arrange financing by themselves, and step by step issue corporate bonds by themselves, without any guarantees by the Government.
In order to bring this strategy in reality, EVN begins to carry out recruitment of an international consultant for evaluating and grading EVN’s creditworthiness, in order to seek for opportunities in the international bond market. As planned, in the first quarter of 2017, such selection of evaluation and grading consultant will be finalized.
“EVN shall move forward to the objective of issuing international bonds, EVN’s indices thus should meet international standards”, said by an EVN’s representative and he added, on January 15, EVNHCMPC will be the first pilot case in developing financial statements according to ERP international standards. Similar financial statement development will be gradually conducted in other subsidiaries of EVN as long as from 2018 EVN entirely will be able to apply international accounting standards.
To prepare for the stage ahead, EVN established a new financial strategy with some firstly introduced initiatives. For instance, for some big upcoming projects which do not obtain the Government’s guarantees, EVN intends to establish new companies and these companies will sign borrowing contracts with new standards.
Another initiative being mentioned was that after completion of a project, the project will be conceded entirely. When the concession is made, such long lasting problems as EVN and generation companies’ debt burdens, unsound financial statements and difficulties caused to new projects can be solved.
Given the fact that the period 2016 – 2020 is considered challenging, when electricity demands keep increasing, oil fired generation sources with high fuel costs will be mobilized to high extent, coal prices tend to escalate remarkably, causing power production costs’ upsurge, the system optimization via science and technology applications to create new breakthrough will be also considered as an ultimate solution by EVN.