Ministry considering EVN’s proposal for electricity price hikes

Monday, Dec 05, 2022 08:40

Workers of Viet Nam Electricity checking a transmission system. Electricity prices are under significant pressure to increase after three years of remaining the same. — VNA/VNS Photo

The Ministry of Industry and Trade is reviewing Viet Nam Electricity's (EVN) proposal to increase electricity prices as rising input cost was weighing on the largest power company with record loss anticipated for this year.

Deputy Minister of Industry and Trade Do Thang Hai said on the sidelines of the Government's November meeting on Thursday that prices of input were rising in both domestic and global markets, which were certainly affecting electricity production prices.

Hai said that according to the EVN's report, the company anticipated a record loss of more than VND31 billion this year despite efforts to reduce costs through repairing, recurrent expenses and optimising operation systems.

Any decisions must comply with the Prime Minister's Decision 24/2017/QD-TTg about the mechanism for adjustment of average retail electricity price.

EVN estimated a loss of more than VND15.7 billion in the first ten months of this year and VND31.36 billion for the full year due to rising input costs from rising coal, oil and gas prices.

While the global fuel prices had not shown any signs of falling to the average level of 2021 this year, the exchange rate kept increasing, and the proportion of cheap power sources such as hydroelectricity decreased. Therefore, EVN was still under pressure to raise electricity selling prices to compensate for the loss.

The current average electricity retail price was VND1,864.44 per kWh (excluded VAT) which was maintained from March 2019 to control inflation and support production and business.

According to statistics on Global Petrol Prices, Viet Nam had a low average electricity price compared to other countries in ASEAN. The average retail price of Viet Nam was higher than only Laos and Malaysia, and lower than Indonesia, Thailand, the Philippines and Singapore.

Economic expert Dinh Trong Thinh said that increasing electricity prices was a relatively urgent need for EVN. "When and how to increase the electricity prices were problems for the management agency to harmonise the interests between the electricity users and the generators, however."

Thinh stressed that any adjustment in electricity prices must be put into careful consideration in the context of inflationary risk, and many enterprises were in difficulty due to rising input costs and strong reductions in orders.

It was necessary to ensure transparency in the costs which constituted electricity prices, Thinh stressed.

According to Ha Dang Son, director of the Centre for Energy and Green Growth Research, if electricity prices were kept low for too long, investors would be hesitant to invest in the power sector.

He said that electricity prices should be adjusted to reasonable levels to ensure economic development while encouraging private investments to ensure national energy security.

Financial expert Ngo Tri Long said that electricity prices being held back too long was a problem that needed to be resolved soon. Otherwise, it would lead to a power supply shortage as happened to the petrol market recently. The costs constituting the prices of necessary goods must be calculated correctly, sufficiently, and reasonably to prevent market distortions and encourage investment. — VNS

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