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Vietnam may not have to cut electricity in dry season: MOIT
The electricity price increase of 15.28 percent was decided by the government in late February. However, this still remains a hot topic because now the prices of goods also increased following the electricity price increases. Deputy Minister of Industry and Trade Hoang Quoc Vuong talked about the issue.
Does the government aim to help the Electricity of Vietnam (EVN) to reduce losses when it decide to raise the electricity price?
There are four reasons that lead to the decision to raise the electricity price. First, the electricity price in Vietnam is too low. It is because we have been trying to curb the electricity price for the last many years, and the prices still do not truly reflect the production costs.
The electricity price adjustment also aims to make electricity pricing more reasonable. We hope that foreign investors will be more interested in power projects.
Third, when the electricity price is lower than the production cost, this does more harm than good. This not only brings losses to EVN, but “encourages” enterprises not to save energy. As a result, they do not care about renovating technologies, while they only import energy consuming technologies which also cause environmental pollution.
The fourth reason is that the decision will help EVN reduce losses. However, the price increases are not high enough to help settle the financial problems of EVN. In 2010, as many power plants had to run with FO and DO oil, the prices of which increased sharply, EVN incurred heavy losses. However, I still cannot release the concrete figure, because the loss has not been audited.
Is the electricity price now attractive enough for foreign investors?
I think that the price increase has still not made the electricity price attractive enough to foreign investors. Since the new price is still lower than the production cost, power investors will still meet difficulties.
The Ministry of Industry and Trade has submitted to the Prime Minister a draft on an electricity pricing mechanism under which the price will be adjusted automatically in accordance with market rules. If the Prime Minister approves the mechanism the electricity price will be adjusted in a flexible way that truly reflects the production costa. We hope that within a few more years the electricity pricing in Vietnam will be in accordance with the market rules.
Will there be another electricity price adjustment in 2011?
We have just announced the increase of electricity prices. Now I still cannot say if the electricity price will be raised once more. The government will be very cautious in making decisions on price increases, because it needs to curb inflation and ensure macroeconomic stability.
The total electricity output in the dry season would be 56 billion kwh, but we can only make out 54 billion kwh. Will the scheduled electricity cuts will occur?
There are good signs showing that we may not have to cut electricity this summer. In late 2010, we released a forecast that there will be a shortage of two billion kwh in the dry season. However, the first two months of the dry season are over and we have not had to cut electricity. The increase of the additional charge was lower than previously forecast, at 12.9 percent only. Therefore, the electricity shortage is expected to decrease to 1.7 billion kwh. In the next four months, from March to June, if the additional charge growth rate is still lower than 18 percent, we will not have to cut electricity. We also hope that good weather will bring more water to hydropower power plants.
Pham Huyen
vietnamnet
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