Electric rates to float on July 1

June 07, 2012 | 14:21

(0) user say

Vietnam will officially deregulate the power market on July 1 to boost competition and reduce the monopoly of the Electricity of Vietnam (EVN).

illustration photo source internet

Deputy Minister of Industry and Trade Hoang Quoc Vuong said many power companies had incurred financial losses because they had been forced to sell electricity to the EVN at below market prices.

He said that in the one-year trial of deregulation, power firms had asked for VND1.18 trillion ($56.6 million) more than they could contractually charge EVN.

The Ministry of Industry and Trade authorised companies capable of generating less than 30MW to increase prices by 5 per cent. The adjustment was basing on the exchange rate, running costs and bank interest rates.

Meanwhile, the ministry said it would consider requests by firms with a capacity of over 30MW to adjust prices.

The Ministry of Finance recently investigated price management at 16 power companies that sold electricity to the EVN, which itself last year sold 28.7 billion kWh.

The inspection team found that most companies' prices were in line with those set by the Ministry of Industry and Trade. However, firms that had not signed contracts, had agreed interim prices with the EVN, the ministry said.

Vuong said that when the power sector was fully deregulated, prices would be determined by supply and demand.

The 2004 Law of Electricity set three goals - competitive power generation from 2005 to 2014, competitive power trading in the following eight years, and retail sale of power after 2020.

A competitive power market is expected to boost production, reduce prices, improve efficiency and attract more funding for power generation. As the power-generation market developed, customers would be able to pick which power provider they wanted to use, the minister said.

VNS

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional