Hanoi (VNS/VNA) - Anumber of hydropower and thermal power companies are facing hardships dueto the severe impacts of the COVID-19 pandemic.

In the second quarter of thisyear, among the 20 listed hydropower companies, 12 saw profits decline,six reported losses and only two witnessed profit rising over thesame period last year.

The declines inearnings were attributed to the disastrous impacts of the COVID-19pandemic, which caused both commercial electricity output and selling prices todecline, thus hitting revenue of many businesses in the industry.

Khanh Hoa Power Joint StockCompany (KHP) suffered a loss of nearly 219 billion VND (9.5 million USD) in Q2.

In the first six months of2020, KHP recorded a decrease of 11 percent in net revenue, reaching 2.23trillion VND, and a slight decrease of 5 percent in cost of goods sold,reaching 2.37 trillion VND.

Vinh Son-Song Hinh HydropowerJSC (VSH) achieved revenue of nearly 55 billion VND in Q2, down by 50 percentyear-on-year and suffered a loss of over 2 billion VND. In the first half ofthis year, the company lost more than 3 billion VND.

According to VSH, a droughtlasting from the end of 2019 to mid-2020 reduced the water flow to thelakes. Therefore, electricity output and production output decreased by 27 percentand 55 percent, respectively, over the same period in 2019.

Truong Thinh Energy InvestmentJoint Stock Company (TTE) recorded a loss of more than 17 billion VND in Q2.

The company said unfavorableweather conditions and the COVID-19 pandemic directly affected its two plants.Due to the disease, some machinery orders from China to Vietnam were suspended.

Listed thermal power companieson the stock exchange had much better business results than the hydropowergroup.

However, compared to the pastyears, the operation of thermal power companies has not reallyprospered. Profit growth was mainly due to cost reductions, while revenuesdeclined.

PetroVietnam Power Corporation(POW) contributed more than half of the total profits reported by the thermalpower group with 735 billion VND in the second quarter of this year.

PetroVietnam Power Nhon Trach 2JSC (NT2) reported a 20 percent increase in Q2 profit compared to the sameperiod last year, reaching 249 billion VND, mainly due to increased financialincome and other interests.

According to MB SecuritiesCompany, electricity is the slowest affected industry in the value chain of productionand services in the current COVID-19 pandemic.

In case thepandemic persists, the development of power projects and transmissionsystems will slow down, leading to pressure on the power supply inthe 2021 - 2025 period.

In addition to the intrinsicdifficulties of the electricity industry, the site clearance and capitalmobilisation and interactions with foreign experts, as well as the import ofequipment, mainly from China and the Republic of Korea, were interrupted,delaying construction progress.

In 2020, hydropower productiondeclined significantly in the first six months and is expected to improve inthe last months of the year.

The water level in the riversin the Central and the Southern region as of early March was 51 percent lowerthan the figure in early 2020. In the North Central and South Central Coastregions, the water flow to hydropower reservoirs is 44 percent lower than early2020.

According to KB VietnamSecurities Company (KBSV), the power shortage will help increase the mobilisedoutput of existing power plants.

A recent report by the Ministryof Industry and Trade said many large thermal power plants are behind scheduleof the revised Power Master Plan 7 approved by the Government, especially inthe Southern region. Vietnam will suffer a power shortage of about 6.6 billionkWh in 2021, around 11.8 billion kWh in 2022 and a peak of 15 billion kWh in2023.

"This power shortage willhelp existing thermal power plants mobilise power with higher efficiency andmore efficient operation," said KBSV.

A common feature of most powerenterprises is that they need a very large amount of initial investment capitalto invest in fixed assets. Most businesses borrow about 70 percent of thiscapital from domestic or foreign banks.

With such a capital structure,most power plants will lose money in the first years of operation due to highinterest expenses and the loans will then gradually decline as business resultsimprove.

According to KBSV'scalculations, the total loan balance of some listed power companies willdecrease rapidly to 24 trillion VND by the end of 2020, compared to 44.4trillion VND at the end of 2018./.