PV Power strives to retain 2019 profits amid rising challenges

During an annual general meeting of shareholders which took place in Hanoi on April 19, representatives from PetroVietnam Power Corporation (PV Power; ticker symbol: POW) noted that the company is in the midst of a challenging year with declining gas sources in the east and southwest regions. This decline could potentially hamper the operation of gas-fueled power plants.

Another challenge is ensuring the stable supply of standardised quality coal for the 1.200 - MW Vung Ang 1 thermal power plant in the central province of Ha Tinh. It comes as the Vietnam National Coal and Mineral Industries Group (Vinacomin), the firm’s main coal provider, faces difficulties in balancing the national coal supply for local thermal power plants.

Furthermore, PV Power is also faced with increasing maintenance and repair costs with several gas-fired projects set to end their maintenance period of 100,000 equivalent operating hours (EOH).

Meanwhile, new projects developed by the firm are in need of large sums of capital while greater efforts are required to mobilize capital as the progress comes close.

Le Nhu Linh, general director of PV Power, said that the firm is striving to produce an estimated 21.6 billion kWh of electricity during 2019, while expecting to reap an estimated VND32.769 trillion (US$1.40 billion) in revenues during the year. Of this, pre-tax profits are projected to reach VND2.5 trillion (US$107.5 million) whilst after-tax profits would stand at VND2.275 trillion (US$97.82 million).

Both revenues and after-tax profits are set to fall slightly some 1 per cent against 2018’s figures.

In 2019, the firm will work closely with the Vietnam Electricity group, Vinacomin, and PV Gas - a subsidiary of the Vietnam Oil and Gas Group -  to efficiently operate and repair power plants, as well as maximize their capacity via the optimal use of coal and gas sources for power generation across power plants.

Another key aim is to assure the stable supply of coal for power generation and to make the most of ash generated by coal-fired power generation.

Meanwhile, efforts must be sustained to prepare investment reports on the construction of the Nhon Trach 3 and 4 LNG-fired power plants. This includes hastening negotiations of LNG supply contracts and power purchase agreements, as well as arranging capital for the two projects. Bidding packages for the different investment phases of these projects are to be implemented within the year.

Additionally focus is placed on promoting the restructuring of the parent company and its member units, along with the divestment and dissolution of unprofitable business subsidiaries. Last year, PV Power completed the divestment of a combined VND100 billion (US$4.3 million) in two subsidiaries, namely Northwest Electric Investment and Development JSC and Song Vang Hydropower JSC.

Last year, PV Power generated a total power output of 21.007 billion kWh, equivalent to 97.3 per cent of the projected figure.

The firm achieved VND33.26 trillion (US$1.43 billion) in revenue and VND2.287 trillion (US$98.34 million) in after-tax profits, 6 per cent and 8 per cent higher than the anticipated figures respectively.

General director Le Nhu Linh said that the real revenues surpassed the figure set for 2018, thanks to the increased average electricity tariff of VND1.045 (4.5 US cents) per kWh compared to the 2017 rate of VND639 (2.7 US cents) per kWh. In addition, the firm’s service providing subsidiaries also posted higher revenues in comparison to the previous year.