EVNGENCO 3 to enjoy great benefit when CGM and WCM put into operation

Power Generation Corporation 3 (EVNGENCO 3) shall not only implement IPO but also be assigned to reduce Government public debts in the privatization process.

EVNGENCO 3 held a roadshow on investment in EVNGENCO 3 at Rex Hotel, Ho Chi Minh City to share its privatization roadmap as well as answer questions to investors.

Strategic investors may govern the Corporation

Deputy General Director of EVN - Mr. Dinh Quang Tri said that with a capacity of 6.304MW, accounting for 16% of the National electricity system, EVNGENCO 3 has attracted many investors to study about any related information and establish cooperation. So far, the Corporation has received applications for strategic investors made by 4 organizations with experience in the Power sector in the world.

According to EVNGENCO 3’s leaders, strategic investors are completing the offerings and will early send them to the Corporation for the bidding purpose because all of them wish to purchase up 36%. The bidding time is scheduled on 15 March 2018 and shares will be issued to strategic investors at the end of 2018.

According to EVNGENCO 3, the investors are not limited to participate in this IPO, therefore, their ownership of share may be up to over 48%. EVNGENCO 3 will also create conditions for strategic partners to intensively participate in the corporate governance system and show responsibility to the Corporation.

According to the privatization roadmap, EVN will hold 51% of EVNGENCO 3’s charter capital until the end of 2019; this is the level required by credit institutions to secure their loans. Therefore, EVN will reduce its ownership to below the governing level if strategic partners and the Corporation can negotiate with the lenders.

EVN is also willing to further sell the capital shares to strategic investors if they show responsibility without causing affect to national energy security. Accordingly, partners can own more than 51% of shares and EVN is willing to divest all its capital from EVNGENCO 3.

Contribution to reduce Government’s public debts

For the IPO, the State will sell more than 267 million shares to the public at a starting price of VND24,600/share on 9 February 2018 with an expected proceeding value of VND25,100 billion. The corporation plans to list the UPCOM on 21 March 2018.

The form of IPO is share issuance and thereby the Government only withdraw VND14,900 billion; the remaining VND10,200 billion (USD$449 million) will be retained by EVNGENCO 3 to develop the enterprise. In case of higher selling price, the increase amount will be distributed to the Government and EVNGENCO 3 at the 51:49 ratio.

USD$300 million included in the amount earned by EVNGENCO 3 from the IPO will be used to pay loans. Regarding loans, representatives of EVNGENCO 3 said that loans of VND2,200 billion and more than ¥27 billion were still valid for up to 10 years. Thus, the repayment will help sharply reduce the cost of loan debts; in addition, the Corporation will also issue International bonds to take advantage of lower interest rates to pay for high-interest loans. EVN collaborates with rating agencies such as Fitch to implement the credit rating for facilitating the loan borrowing. This is also a roadmap to reduce the Government’s public debt.

At low cost, EVNGENCO 3 to enjoy great benefit when CGM and WCM put into operation

EVNGENCO 3 added that the corporation's gas and hydropower plants have a great competitive advantage in the competitive generation market (CGM) thanks to the lower average cost of production in their plants compared to the others in the same industry. Therefore, the current electricity price of EVNGENCO 3 is also lower than the market’s due to the dependence on the fixed price as specified in the power purchase agreement (PPA).

Therefore, the opening scope of the electricity market in the coming time will bring great benefits to EVNGENCO 3. According to the roadmap, the current market’s opening scope is only 10%, it will increase to 15% in 2018 and may be up to 40% in the coming years, creating a much higher price and revenue than the present one.

The wholesale competitive market (WCM) is most beneficial for power generation companies located near customers. EVNGENCO 3 is now remaining good relations with Ho Chi Minh City Power Corporation and Southern Power Corporation, the relations will help the Corporation enjoy great benefits when WCM are put into operation.

EVNGENCO 3 also plans to invest in improving the capacity of its plants, thereby reducing the risks from implementing future projects. The Corporation will also develop the centralized maintenance model through EPS Company; at the same time, promote projects using such renewable fuels as solar and wind power, etc.

  • 08/02/2018 12:13
  • evn.com.vn