Electricity price might futher increase next May

Leaders of the Ministry of Industry and Trade and country’s largest power company Vietnam Electricity (EVN) yesterday hosted a press conference to answer press queries about retail power price hike by 6.08 percent to VND1,710 a kWh on December 1.

Electricity price might futher increase next May

Many peole questined if EVN will increase electricity price whenever it is loss making. Some said despite suffering a loss of VND593.46 billion (US$21.14 million) in power generation and trading last year, the group still earns a profit of VND2.6 trillion ($115 million) in overall. Since mid 2016, lot of hydropower plants have reported profitable while hydrological conditions have been advantageous for power production.
In response, Mr. Nguyen Anh Tuan, head of Electricity Regulatory Authority under the Ministry of Industry and Trade, said that EVN has yet to put the loss of VND9 trillion ($396.4 million) caused by exchange rate fluctuation in previous years into electricity prices.
The loss should have been taken into power price immediately but the Government has asked the Ministry of Finance to gradually put the loss into the power price year by year with a specific roadmap to prevent heavy pressure on retail electricity price. Part of the loss has been put in the December 1 price hike.
At present, domestic capital mobilization for power source development is difficult so the industry must sign contracts in foreign currencies while exchange rates have fluctuated for the last 2-3 years and significantly affected electricity prices.
According to the Prime Minister’s regulations, losses owning to exchange rate fluctuations will gradually be put into electricity price, said deputy director general of Vietnam Electricity (EVN) To Quang Lam.
When input parameters including exchange rate cause power price up from 3 percent or higher compared to current price, it is permitted to raise selling price. But the adjustment must be six month from the latest change. So if the price moves up, it must be in May next year at the fastest, he said.
In response to the query that if electricity price hike affects inflation and costs for businesses, Mr. Nguyen Anh Tuan said that might increase 0.07 percent production costs and 0.08 percent consumer price index (CPI) in 2017, quoting estimations by the Ministry of Planning and Investment and calculations by the General Statistics Office of Vietnam.
In the total number of 28.5 million households using electricity, about 78 percent consumes less than 200 kilowatts a month. Experts calculated that the power price raise will affect 0.1 percent CPI and 0.166 gross domestic product this year.
The public has raised concern that the retail electricity price will affect the poor and foreign direct investment.
In reply, Mr. Tran Tue Quang, deputy head of the Electricity Regulatory Authority, said that according to new regulations, the price frame for each group of customers such as public service units, businesses and households was similar to before.
Mr. Tuan added that the power price change this time has been approved by the PM. However the PM has announced that EVN is just permitted to increase price within the price frame during this period, raise beyond the frame must be reported to the Government.
Statistics last year show that there are 5.4 million customers using 50-100 kWh. The government now assist poor households with VND2.5 trillion ($110.11 million) a year, equivalent to VND51,000 a month for the first 50 kWhs.

By VAN PHUC – Translated by Hai Mien

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