Vietnam's electricity tariff to increase next month

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Prime Minister Nguyen Tan Dung has asked the Ministry of Finance and the Ministry of Industry and Trade (MoIT) to complete the final proposal for the increase soon.

An anonymous official from the MoIT said that the average household electricity price will increase by 15 per cent from just over VND1,000 VND ($0.05) per kWh.

If approved, this will be the biggest ever electricity price hike in the country's history.

Last March, the government decided to raise the retail power price by 6.8 per cent against 2009, compared to the 10.7 per cent proposed by the MoIT and the Ministry of Finance.

Last year's increase was based on the price of coal in 2010.

Power price hikes in Vietnam mainly affect households that are already subsidised by the government rather than industries that pay the full market price.

Households consume about 38-40 per cent of electricity sold in the country.

The Prime Minister also asked the  MoIT to make stronger efforts to ensure power production and supply and to speed up the implementation of power plant projects.

The demand for electricity in the first six month of this year is forecast to rise by 18 percent against last year while electricity production will be up by only 14 per cent.

The PM also asked the MoIT and the Ministry of Finance to adjust the price of other essential goods, including coal and oil, in accordance with market prices.

However, policies supporting the poor must be given an emphasis, said Dung.

More efforts must also be spent now to control the trade deficit, to make it less than 18 per cent this year, an important goal already set for the country, he said.

Non-urgent government projects are also told to make cut backs in a bid to help the country control inflation.