When state-run utilities’ meat is consumers’ poison

When state-run utilities’ meat is consumers’ poison

Many state-run giants operating in the power, fuel, and telecom sectors have reported whopping profits in 2013, while consumers remain burdened by exorbitant prices for these utilities.

Economic experts are wondering if these are results of their good administrative management or the exclusive rights they are granted by the government as the monopoly of these industries.

The state-run enterprises that have come under doubt are the country’s power monopoly EVN, fuel giant Petrolimex, and the leading telecom group Viettel.

Military-run Viettel posted a pretax profit of VND35.08 trillion (US$1.65 billion) in 2013, a 27.5 percent increase compared to 2012. With total revenues topping VND162.88 trillion, the profit to revenue ratio of the largest mobile network operator is as high as 21.54 percent.

VNPT, another state-run telecom enterprise, also reported VND9.28 trillion worth of earnings in 2013, up by 89.38 percent from a year earlier.

Meanwhile, the subscribers of Viettel and VNPT-owned Vinaphone and MobiFone had to suffer exorbitant 3G costs since October, when the three companies simultaneously hiked prices by 40 percent.

The 3G price hike took an important role in the whopping profits of the network operators as VNPT’s earnings in the second half of last year were some VND445 billion more than in the first half.

Doctor Nguyen Ngoc Son, who teaches competition law at the Ho Chi Minh City University of Economics and Law, said it is no surprise to see the telecom monopolies report massive earnings.

“They dominate the market and are allowed to hike prices many times, so these huge profits are no surprise,” he said.

Similarly, the pretax profit growth of Petrolimex in 2013 was 97.07 percent from 2012. As a multifaceted group, profits from the fuel trading activities of Petrolimex accounted for nearly 40 percent of the total figures, or VND768 billion against VND1,929 billion.

Petrolimex released 11 price adjustments in 2013, in which fuel prices gained VND3,220 per liter, but lost only VND2,160 per liter.

The fuel wholesaler also benefited from six adjustments on fuel import duties and the deduction rates to contribute to the fuel price stabilization fund. These policy incentives enabled the company to boost profits.

Calling the mechanism on managing fuel prices “an unfair game,” Dr. Son criticized Petrolimex for always complaining of losses and requesting to increase prices while they eventually “posted massive profits.”

Unlike the above state-run enterprises, EVN, the Electricity Group of Vietnam, refused to publicize its 2013 earnings.

Deputy CEO of EVN Dinh Quang Tri has told the media that the profit is as modest as VND172 billion. But in a report, EVN revealed that it has managed to cover part of the VND19.8 trillion accumulated losses in 2013.

Meanwhile, Vietnamese consumers have suffered from higher power prices after a hike on August 1, the seventh power price increase by EVN since 2009.

Prices could increase even more as EVN is allowed a 22 percent increase from current rates from now to 2015 under a plan approved by the Prime Minister.

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