High voltage power debate

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>> Vietnam's electricity tariff to increase next month

A Ministry of Industry and Trade (MoIT) senior official told VIR that new electricity prices might be applicable from March 1, 2011 based on power price revision practices in some recent years. 

According to MoIT and Ministry of Finance (MoF) sources, there are five price revision plans which count on relevant factors such as coal and oil prices.

The MoIT and MoF reportedly uphold a ‘moderate’ price revision to avoid casting big impacts on production and consumption. Meanwhile, management authorities will still continue supportive policies towards low-paid and needy people.

Many specialists anticipate a 20 per cent upward revision of current electricity prices, while some suggest as high as 50 per cent hike over existing power prices.

Advocates of the latter said the price leap would boost investments into power sector’s development, particularly wooing foreign investors and ameliorating consumers’ habits of using electricity.

Representing coal producers, an input fuel in power production, state-run Vinacomin general director Tran Xuan Hoa said Vinacomin proposed hiking the price of coal sold to the power sector under market rules.

“Currently, the price of coal sold to the power sector is only 65-68 per cent of the actual production cost, so that we suggested the coal price at least equal to the production cost, plus certain profits to coal producers to ensure them keep on running,” Hoa said.

Hoa said Vinacomin’s coal sellers were anxious as they were owed a large amount of money by the power sector.

Besides Vinacomin, the Electricity of Vietnam (EVN) currently owes VND2-3 trillion ($100-150 million) to businesses selling it power. An industry specialist said since the present electricity price was lower than actual production costs, EVN’s debt of several trillion Vietnam dong would not be addressed.

In early 2011, EVN chairman Dao Van Hung said EVN incurred losses of around VND8 trillion ($400 million) in 2010 as it needed to buy power at high costs to reduce power shortages in the dry season when hydropower plants were short of water.

In respect to 2011 power sector solutions, EVN’s leadership asked the government to raise power prices, urged the Social Insurance Fund to lend EVN up to VND15 trillion ($750 million) for power resources investments or act as underwriter for EVN to seek $1 billion loan through international bond issuances.