The Hanoitimes - Related officials attributed the price hike to the efforts to make the power market more competitive.
Vietnam is likely to raise electricity prices by 8.36% this month, Deputy Minister of Industry and Trade Hoang Quoc Vuong told newswire VnExpress on Tuesday [March 5].
According to the hike plan, the average price would be VND1,850 (8 US cent) per kWh, excluding value added tax (VAT), Vuong said.
Power prices in Vietnam keep rising for years. Photo: ERAV
Related officials attributed the price hike to the efforts to make the power market more competitive.
They said that the input cost is higher due to increasing supply from more expensive gas-fueled and coal-fired power sources recently.
In addition, consumption has risen 10% over the past months while many power projects are under construction, threatening the power shortage.
In accordance with the prime minister’s decisions, the Ministry of Industry and Trade is eligible to raise power prices between 5% and 10% once it suffers an increase of at least 5% in the input cost.
In a meeting in January 2019, Deputy Prime Minister Vuong Dinh Hue urged ministries and agencies to make transparent reports on the input cost, including prices of gas, coal, and exchange rates.
He noted that “the price hike should be reasonable enough to attract investors and cause no harm to the production and purchasing power.” “The power sector must save cost by applying advanced technologies and reducing expenses on production and labor costs.”
The latest power price hike took place in December 1, 2017 with a rise of 6.08%, raising the price to VND1,721/kWh (7.4 US cent), excluding VAT.
Domestic experts have criticized Electricity of Vietnam (EVN), the country’s sole power distributor, for adding other cost, including operational expenses to the selling electricity prices. Lack of transparency in calculating power prices remains questionable.
So far, increases in electricity prices have affected a large part of people, mostly low-income earners.
In July 2018, Prime Minister Nguyen Xuan Phuc banned any increase in electricity prices and medical fees for the rest of the year, aiming to keep the inflation rate below 4% and achieve a GDP growth rate of 6.7% in 2018.
EVN had a revenue of VND293.18 trillion (US$12.61 billion) in 2017, including VND289.25 trillion (US$12.44 billion) from electricity sales, an increase of 8.94% from the previous year.