State utility Electricity of Vietnam will continue to be in the red this year after posting losses of VND10,162 billion (US$483.9 million) in 2010, a government official said Saturday.
Power production is currently a loss-making business as the more electricity is generated, the greater the losses, said Deputy Trade and Industry Minister Hoang Quoc Vuong.
He said the utility, also known as EVN, may default unless the losses are cleaned up.
"The losses for 2011 are not expected to be lower than last year, so changes have to be made to help EVN survive," Vuong told a press briefing in Hanoi.
The deputy minister, however, declined to confirm any plan for a price hike. "I cannot say whether prices will be increased because it's not just the Ministry of Industry and Trade but it's a decision of the government," Vuong said.
According to a report jointly released by the industry and finance ministries Saturday, the total loss of more than VND10 trillion last year did not include losses that might occur from investments beyond the power sector.
EVN incurred a loss of VND120 on every kilowatt-hour of electricity sold in 2010, the report said.
Pham Le Thanh, general director of the power monopoly, said the figure is actually higher now, at VND300 per kWh.
He said due to a serious shortfall of electricity produced by hydropower plants last year, his company had to spend a lot of money to run oil-powered plants instead.
EVN has been seeking a price hike for several months. After an increase in March, the average retail price stands at VND1,242, or around 6 US cents, per kWh. The company has said the price should be raised at least to VND1,350 per so that it can break even.
At the press briefing Saturday, EVN also annouced a plan to divest completely from non-core business areas, including the securities and banking sectors, in the next two years.
Deputy Minister Vuong said the government is considering merging EVN Telecom, a subsidiary of EVN, with military-run Viettel.