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Ministry says 4.9% electricity price increase is the best option
The Ministry of Industry and Trade (MOIT) has submitted to the Prime Minister suggested plans to raise the electricity price by 4.9 percent.
Here MOIT’s deputy minister Bui Xuan Khu explains the reasoning.
VietNamNet: Could you please tell us more about suggested plans by MOIT regarding the electricity price in 2010?
Bui Xuan Khu: The Electricity of Vietnam has submitted to MOIT four options for electricity price increases for 2010
We finally decided to submit to the Government the option with the lowest price increase. This is that prices should be raised by 4.9 percent, from 948.5 dong to 1,019 dong per kilowatt. The price increase should be valid as of March 1, 2010.
VietNamNet: What would you say about the suggested options by the Electricity Regulatory Authority?
Khu: With the lowest price increases, the impact on society and people’s life will be gentle. With the two other options (10.58 percent and 5.68 percent increases), the price increases would have had a major impact on the national economy. Meanwhile, we anticipate that we will have to face a lot of problems in 2010.
The national economy has just recovered a little from the downturn, while the impacts of the global crisis remain. If the electricity price is pushed up to overly high levels, this may be unbearable for the national economy.
I think we should take safe steps – ie setting the lowest price increases, then considering how the economy can stand the increases before making further steps.
VietNamNet: How about the coal price? Will the coal price to be applied to electricity producers will be lower than the market price?
Khu: Yes, the coal price would increase by 15 percent only from the current price. Vinacomin demands sharp increases of 149 percent, but if the electricity price increases by less than five percent, the coal price must not rise too sharply.
In fact, coal producers will not make a loss. In 2009, they made a profit of several trillion dong. Therefore, despite selling coal at the prices below the market price, they will still be okay.
VietNamNet: How comes the electricity price keeps on rising, and it never goes down?
Khu: The outstanding characteristic of the electricity price in Vietnam is that the price is low and that will discourage foreign investors in the power sector.
In fact, the electricity price has been increasing, but if you calculate the price in dollars, you can see that the prices are the same.
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The possible impacts of the three options on electricity price increases
- If the electricity price increases by 10.58 percent, the money to be paid for electricity would increase by 8,500 billion dong. GDP would decrease by 0.5 percent, CPI would increase by 0.3-0.4 percent. The money to be paid for electricity to run production would increase by 4 trillion dong
- If the electricity price increases by 5.68 percent, the money to be paid for electricity would increase by 4,500 billion dong. GDP would decrease by 0.28 percent, CPI would increase by 0.1-0.2 percent. The money to be paid for electricity to run production would increase by 2,100 trillion dong
- If the electricity price increased by 4.9 percent, GDP would decrease by 0.2 percent, CPI increase by 0.1 percent, while the money to be paid for electricity will increase by 1,800-1,900 billion dong
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Pham Huyen
vietnamnet
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