MoI powers ahead with plan to raise electricity prices

Business could soon be in for a shock

“Vietnam’s economy is facing the high possibility of power shortages in the coming time. The awareness of consumers will increase along with the rise of power prices,” said an MoI source.
According to the MoI, the new average level of electricity prices will increase up to VND852 ($0.053) per kWh, an increase of 8.8 per cent against the current level.
MoI’s officials said that the new increase had received support from people and enterprises in the community and if it is applied the price rise is expected to bring a number of different advantages. Hoang Trung Hai, Minister of Industry said that the prime minister had accepted the increase of power price; however, due to the rise of commodity prices, the price of power should be taken into careful consideration.
The joint committee on electricity price increase, made up of various agencies such as the office of government, ministries of Industry, Finance, Planning and Investment, and Electricity of Vietnam (EVN) have supported the increase. Experts on the team said that the new electricity price, with an increase of 8.8 per cent, will not make a huge impact on households, whilst enterprises will not be affected under the context that the country is deeply integrating into the world economy, and increasing competitive capability for the survival of local enterprises is a government priority.
“The increase of electricity price set to occur after four years of suspension will no longer discourage foreign investors in the electricity industry and settle a part of the capital shortage for development of electric plants,” said EVN general director Dao Van Hung.
He said that after a four year suspension on any increase in electricity prices, many investors were discouraged from making investments into electricity production because the prices were too low and profits could not be guaranteed. However, there were still protests at the meeting, requesting MoI and EVN to be cautious as the increase would impact households and the businesses of thousands of enterprises. EVN said that it was now time for the power price increase to be put into effect as a result of increasing oil and gas, and coal prices. It is estimated that the EVN is in need of $5 billion per year until 2025 to develop dozens of power plants to satisfy the energy demands.







No. 769/July 10-16, 2006