EVN explains the US$85 million arrears claimed by MoF for its misrepresentation
By Minh An
December 31, 2017 | 06:46 AM GMT+7
Vietnam Electricity (EVN) has been alleged to inaccurately report some of the costs and revenues, leading to the reduction of tax and interest which must be paid to the State budget.
On December 28, local media reported that the Ministry of Finance has decided to collect VND1.935 billion (roughly US$85.37 million) arrears from EVN. This is the amount of money that EVN has to pay into the State budget after being found to misrepresent some of the costs resulting in the reduction of sales and profits in 2015 and 2016
EVN has issued a notice explaining the cost accounting and confirmed that the group was continuing to explain the arrears to the Ministry of Finance and have reported to the Prime Minister for consideration and decision.
Regarding the expense for the transportation of gas from Phu My - Ho Chi Minh City, an additional VND1,900 billion (roughly US$83.83 million) has been arising in the 2012-2015 period. This expenditure was allocated according to the official dispatch No. 12577/BCT-TCNL dated December 8, 2015, by the Ministry of Industry and Trade and the official dispatch No. 872/VPCP-KTTH dated February 4, 2016, of the Government Office of Vietnam.
"The allocation of these costs in the 2015-2016 period instead of 2016-2017 period shows the effort of EVN in saving self-balancing costs to reduce the pressure on retail electricity prices," according to the report of EVN.
EVN added that electricity retail prices applied from December 1, 2017, do not include these costs.
In addition, EVN has no source to offset the cost of electricity retailing if the it goes beyond the cost of production in 2015 and is allocated to production costs in 2017.
With regard to VND4,847 billion (roughly US$213.85 million) in exchange rate difference arising from the Nghi Son 1 thermal power project, EVN explained that the Ministry of Finance has allowed the exchange rate difference in the investment of electricity projects included in the national electricity development plannings approved by the Prime Minister. The exchange rate difference would be reflected in the accumulated amount and gradually allocated to the financial revenue or financial expenses when the enterprises go into operation. The allocation time would not exceed five years from the time the project is put into operation.
EVN also said that Nghi Son 1 thermal power plant is one of the dependent accounting subsidiaries of EVN Genco1. However, this project is funded by the Japan International Cooperation Agency (JICA) that required EVN to continue working as the project’s investor. Accordingly, the project would only be transferred to EVN Genco 1 after the construction of the project is completed. This has been approved by the Ministry of Industry and Trade.
Currently, EVN is carrying out procedures for handing over Nghi Son 1 thermal power project to EVN Genco 1 by December 31, 2017. EVN will hand over the exchange rate difference in the construction period of this project for EVN Genco 1 to account.
EVN affirmed that the Nghi Son 1 thermal power project is a project under EVN Genco 1. Therefore, according to regulations, the difference in the exchange rate in the construction period of this project must be transferred to EVN Genco 1.
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