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Electricity price won’t increase until December at least
The information that the Electricity of Vietnam has proposed the Ministry of Industry and Trade (MOIT) to allow raising the electricity price from November 2011 has stirred up the public. However, the public has been reassured that the price increase won’t be decided in the last months of the year.
The Electricity of Vietnam is seeking the permission for the 10-13 percent electricity price increase. And if the plan is approved by MOIT and the Ministry of Finance, the new electricity prices would be 1403 dong per kwh instead of the current 1242 dong per kwh.
If the EVN’s proposal is accepted, this will be the second electricity price increase so far this year. Prior to that, in March 2011, the electricity price was once raised by 15.28 percent, also following an EVN’s proposal.
Explaining the proposal, EVN said that the economic group has been incurring losses because it has to sell electricity at the prices below the production costs, as requested by the government to help curb the inflation. As the sale prices are not high enough to cover expenses, EVN still cannot reduce the losses.
The powerful economic group has reported the loss of 3 trillion dong which has been caused by many factors. One of the reasons is that EVN has to buy electricity at high prices from some independent power plants and sells at the prices fixed by the State. Besides, when necessary, EVN has to use oil to generate power.
Also, the dong/dollar exchange rate decision by the State Bank of Vietnam has also brought loss to EVN. The power group has also reported losses from the investments in non-power investment sectors.
However, people and businesses have sighed with relief after hearing that the Ministry of Finance does not think that it is now the right time to adjust the electricity prices.
In the dispatch sent to the Ministry of Industry and Trade recently, Minister of Finance Vuong Dinh Hue affirmed that his ministry agrees on the principle that the electricity sale price must be high enough to cover the expenses for power generation.
However, Hue said that MOF still needs to consider many other factors in order to decide when to adjust the electricity price. In such current circumstances, when people have to fasten their belt due to the high inflation rate, and businesses have to struggle to survive because of the low demand, the electricity price increases may create negative impacts.
Hue has requested EVN to join forces with MOIT and MOF to build up a plan on electricity pricing, suggest the roadmap on electricity price adjustment with the consideration over the possible impacts of the electricity price increases on the society’s life and businesses’ operation.
Deputy Prime Minister Vu Van Ninh, when talking to local press on the sideline of the ongoing National Assembly’s session, said that the government will make a decision on the electricity price based on the harmonization of the benefits of enterprises, people and power plants, with the consideration of the task of fighting against inflation.
“The government will make the decision which allows to harmonize the benefits of the involved parties, and to allow gathering resources for investment,” Ninh said.
Ninh said that EVN still cannot attract much investment into the power sector because the EVN’s big losses have made investors hesitant.
He went on to say that the electricity price will increase, step by step. The price will not increase by 62 percent immediately, just to help EVN escape from losses. The price will not have to increase every three months in a fixed plan, but will increase depending on the economic conditions. Since March 2011, the price has not been adjusted because Vietnam has been prioritizing the fight against the inflation.
Ninh has denied the fact that the electricity price would be raised to cover the losses incurred by EVN from its investments in non-power fields.
“The government will regulate the national economy after considering the situation. Therefore, no one can say for sure when the electricity price will be adjusted in the last months of the year,” Ninh said.
Meanwhile, a source from EVN has said that the electricity price will not occur in October or November. “The National Assembly is meeting, while the government is still focusing on fighting against inflation. Therefore, nothing will be changed in this month and the next month,” he said.
vietnamnet, VnExpress, TBKTVN
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