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Power price hike zapping business
The new calculation of peak-hour power prices for this year will continue, while support for sectors hard-hit by peak-hour prices will be considered.
Under the Ministry of Industry and Trade (MoIT) Circular 05/2009 TT-BCT issued in late February, businesses have been charged almost double the normal cost if they use electricity during peak hours between 9.30am and 11.30am and between 5pm and 8pm. Peak hours were previously from 6pm to 10pm.
Electricity prices at peak hours are now VND1,900 ($0.106) per kilowatt-hour, as compared to VND955 ($0.0536) for normal hours. MoIT deputy minister Bui Xuan Khu said any adjustment in applying new power prices and peak hour calculations would hinder the ministry’s efforts to bring electricity prices in line with real market prices.
The MoIT argued that the new calculation method for power prices was aimed at encouraging businesses to adjust production plans to reduce electricity consumption during peak hours, thereby avoiding power shortages.
One month after the new regulation took effect, local firms complained that their production costs have increased 25-30 per cent due to the higher charges for peak-hour production. Even those trying to avoid operations during peak-hour times had to suffer additional charges.
General director of the Haiphong-based Garment 2 Joint Stock Company, Tran Thi Sinh Duyen, said the new policy demanded unreasonable changes from garment companies. The Garment 2 company has two working shifts between 7am and 11.30am and between 1.30pm and 6pm.
“We cannot arrange for our workers to have a two-hour break in the morning and still pay their salary during that time due to the new calculation,” Duyen said. The company could not arrange new working hours in the evening since it would affect workers’ capability and product quality. “Paying for the workers’ extra hours will be tougher. We are considering two choices, to reduce the number of our workers or to refuse new orders,” Duyen said.
In mid-March, the Ho Chi Minh City Garment, Textile and Embroidery Association and the Vietnam Leather & Footwear Association (Lefaso) sent letters to the MoIT asking for changed peak hour calculations to support enterprises. According to Lefaso, local footwear producers would be charged an extra 24.7 per cent for operating in peak hours. The Vietnam Plastic Association (VPA) last week asked authorities to abolish the two peak hours in the morning.
Khu said the ministry had been investigating enterprises’s situations. A final report on businesses operations will be made in April, in which the MoIT will publish support policies for certain sectors. The average retail electricity price has increased 8.92 per cent to VND948.5 ($0.0532) per kWh since March 1. In early March, the state-run Electricity Vietnam (EVN) warned of possible power shortages during the dry season due to a lack of fuel for the power plants in the south run by PetroVietnam.
The country plans to generate about 83.3 billion kilowatt-hours of power this year, of which 57.44 billion kilowatt-hours will be produced by the EVN.
VietNamNet/VIR
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