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Electricity price increase plan submitted to Government
Deputy Minister of Industry and Trade Bui Xuan Khu has told VietNamNet that the ministry has submitted the electricity price increase plan to the Government. Two projects for the price increase have been suggested with the increase of 8.3% for the low scenario and increase of over 9% for the high scenario.
Khu said that the suggested projects have considered the current socio-economic conditions. Under the roadmap on electricity price increase, the increase will be applied in the first quarter of 2009.
What are the differences between the projects submitted by the Ministry of Industry and Trade (MOIT) and the ones suggested by the Electricity of Vietnam?
EVN wants bigger increases to happen sooner than that suggested by MOIT. MOIT has considered the commodity prices and the withstanding of businesses. Another noteworthy thing is that the decreasing crude oil prices will affect the prices of other kinds of power.
You have said that the price increases have been designed in accordance with the electricity price adjustment roadmap. However, do you think that it is necessary to reconsider the price increase when the demand is decreasing as nowadays?
No, I don’t think so. Currently, we have very cheap electricity from hydropower plants, the depreciation period of which have run out. If we only consume electricity from hydropower plants, we will make fat profit. However, in fact, we also have to use the electricity from newly operational thermo-power plants like Ca Mau, which is selling electricity at US 0.08/kwh. With the retail price of US 0.05, we are making the loss of US 0.03. Therefore, raising electricity price proves to be unavoidable.
Has MOIT considered the possible impacts of the electricity price increases on people’s lives and production?
We have made thorough consideration when drawing up the projects. The average electricity price in the world is now US 0.07. However, it would be unbearable for both businesses and consumers to see the price soar to US 0.07 at once. The price increases will be carried out step by step.
Can you see any possibility of delaying the electricity price increase plan?
The Government asked MOIT to build up the plan on electricity price increase. We have done this and we are waiting for the Government’s decision. The price increase has been scheduled to take place in Q1, 2009.
The Government is trying to stimulate the demand. Do you think that the electricity price increases at this moment will spoil the demand stimulus program?
It seems that a paradox exists that the electricity price increases at the time when we need to see the prices decrease to stimulate demand. However, I have to remind you that if the price increases by 8%, the production cost will not increase sharply, as electricity just amounts to several percent of the production cost.
Phuoc Ha
vietnamnet
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