The Government is not considering to increase power tariff because of difficulties in the economy. — Photo cafef.vn

The Government is not considering a hike in power tariffs, said Do Thang Hai, deputy minister of Industry and Trade (MoIT).

Hai told the National Assembly session on Saturday that electricity and petroleum are key items that affect all sectors, production and people’s lives. So any change in the rate of these items, especially a price hike, should be calculated carefully, he said.

If the Electricity of Viet Nam (EVN), which is under the MoIT, proposes a tariff hike, the ministry will review the proposal thoroughly before submitting it to the Prime Minister for approval.

“The Government has instructed that the retail price of electricity should not be increased this year because of difficulties in the economy,” Hai said. “If EVN proposes a hike, the ministry will carefully assess its impact on other products as well as its effect on economic growth and the consumer price index (CPI).”

Earlier, the Government had asked the ministry to instruct EVN to complete reports on its overall production, business, costs and retail prices in 2016, as well as its plans for 2017. Based on these reports, EVN will propose a power price mechanism this year.

Deputy Prime Minister Vuong Dinh Hue has asked the national power company to propose tariffs based on actual production costs this year. The move aims to ensure that EVN makes profits, create favourable conditions to attract investment in renewable energy, and curb inflation at the same time.

According to the General Statistics Office, if power tariff increases by 3 per cent, it will raise CPI by 0.081 per cent. The CPI will rise by 0.189 per cent and 0.243 per cent if the retail electricity price rises by 5 and 7 per cent, respectively.

EVN calculations show that its total production cost in 2017 is expected to increase to VND7.2 trillion (US$316.7 million) because of the fluctuation in coal, gas and oil prices. Input costs, especially of coal, have been increasing continuously since 2015, but they have not been incorporated into the power tariff. Coal prices, which have risen 7 per cent since December 2016, account for around VND4.7 trillion of the total spending.

In addition, the consumption of electricity has been growing rapidly, at 12 to 13 per cent a year, putting pressure on the power sector.

The last hike in power tariff was two years ago when prices went up by 7.5 per cent to an average retail price of VND1,622 per kWh. — VNS