EVN blames stock market slump for slow divestment progress

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State utility Electricity of Vietnam said its plan to exit non-core operations and pull back investments worth VND1.1 trillion (US$52.8 million) is being hindered by the decline in the stock market.

The company has invested in various sectors including banking, insurance, real estate and securities, but due to the market downturn it has become difficult to sell shares, Deputy General Director Dinh Quang Tri told local media last Friday.

EVN, for instance, has been trying to reduce its stake in An Binh Bank, offering to sell shares at VND10,000 per share. However, market prices are only around VND7,000.

"Government regulations require us to sell shares at higher prices than the book value. As I have said earlier, if the government wants us to divest immediately, we will have to accept whatever prices available on the market," Tri said. "Otherwise we will have to wait for a market rebound."

The government has given state-owned companies until 2015 to divest from business lines not related to their main activities.

Earlier this month the government ordered EVN to gradually increase power prices and stop posting losses. The utility is allowed to raise prices so that it will no longer have to sell below cost in 2013.

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The government has subsidized prices in order to keep prices stable, Tri told the press.

Responding to a question on why the average power price was raised by 5 percent on July 1, he said although it seems like EVN should have lower prices because water levels for power production were high this year and consumption has fallen, the company needs to deal with huge losses.

The utility reported a loss of VND3.5 trillion ($166.4 million) for 2011.

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