MoIT to adjust electricity prices to ensure cash flow for EVN

Decision No. 24/2017/QD-TTg of the prime minister stipulates that EVN has the right to adjust the average electricity retail price to rise from 3 per cent to below 5 per cent. This regulation ensures the level of self-determination of enterprises within the price bracket approved by the Prime Minister, according to Do Thang Hai, deputy minister of the MoIT, on August 5.

The MoIT is seeking the feedback of relevant ministries about the draft amending the mechanism for adjusting the retail electricity tariff and the draft decision of the prime mnister on the new electricity retail tariff structure.

According to the MoIT, Vietnam has paid higher costs to import fuel for electricity production since the end of the first quarter of 2022 due to the price hike in the global market. This leads to an increase in EVN's electricity purchases, affecting the company's financial balance and cash flow. Therefore, EVN has proposed to increase electricity prices in 2022 and 2023 to ensure cash flow for its electricity purchases from power plants, thereby improving EVN's financial situation.

"Electricity prices need to be adjusted to a high level to ensure financial balance and cash flow for EVN," Hai said.

When considering EVN's proposal to adjust electricity prices in 2022 and 2023, the Prime Minister commented that it was necessary to study and adjust electricity prices according to a step-by-step roadmap to avoid causing a great impact on the macroeconomy, business and production activities.

Based on EVN's proposal, the MoIT has proposed that the average retail price of electricity should be reviewed for adjustment every three months. This is in line with the provisions of Decision 24 stipulating that EVN must report the updated electricity price calculation quarterly.

After analysing the proposals based on the current socioeconomic situation, the MoIT also suggested adjusting the electricity retail prices in two phases.

The electricity selling price is adjusted to a minimum for customers using electricity for non-living purposes. The adjustment should not cause too much fluctuation in the implementation of the electricity retail tariff structure, while still solving the urgent issues raised by the public in recent years.

Tourism accommodation establishments will pay a retail electricity price equal to that for production. Electricity selling prices by voltage levels above 35 kV, medium voltage from 01 kV to 35 kV, and low voltage below 01 kV are combined to apply to groups of customers in production, business, administrative, and tourist accommodation establishments.

In the second phase, MoIT, in collaboration with EVN, will closely monitor and update the data while evaluating the impact of the proposals on production and people's lives. The two sides will develop a roadmap for application in stages in line with the economic recovery and report to the Prime Minister for his decision.

The MoIT has also considered the pilot of applying electricity selling prices according to capacity and electricity to customers using electricity for production at 110 kV or higher. The pilot will offer a thorough assessment before making an official application.