Power hope for foreigners

Under the plan, foreign consumers would receive around a 10 per cent cut in electricity prices. According to Minister of Industry Hoang Trung Hai, the government is currently assessing the plan to level the electricity playing field early next year.
“After a period of gradually narrowing the price gap between foreigners and Vietnamese, now is the time to remove the current dual price system on electricity usage,” Hai said.
“This would bring much benefit to the country in attracting foreign-invested enterprises. The business environment would be considerably improved and discrimination between foreigners and Vietnamese would be removed,” he added.
The deputy general director of a foreign-invested motorbike production firm, who preferred to remain unnamed, said the new scheme would allow his company to save money and lower the price of its products.
“Vietnamese firms would have to make more of an effort to increase their competitiveness to be able to compete with foreign rivals,” he said.
However, according to industry experts, lowering the electricity price for foreigners would place significant strain on Electricity of Vietnam (EVN).
Dao Van Hung, EVN’s general director, said the reduction of electricity prices for foreigners would dent EVN’s profits in 2005, possibly also affecting the company’s long-term investment viability. He estimated that EVN would lose up to VND300 billion ($19.2 million) in 2005 if the new price scheme were approved.
“If that happens, the EVN would have to submit a proposal to the MoI and the government for raising investment capital in the future to offset reduced revenue caused by the move,” he said.
Industry minister Hai agreed, saying that under the EVN’s development plan, the electricity giant would need about $14 billion in the next five years.
“The electricity price should have been changed within the past three years,” Hai said. He also pointed out the possibility that the electricity price could be adjusted in 2005, although he said the final decision should be made by the government.
“Pressures on needing capital and seeking financial sources for investment development of electricity are very high,” he said, adding that the current capital to return ratio of the electricity sector remained at a relatively low level of just 4 per cent.