Electricity rate hike put on hold

November 9, 2011

Electricity rates will remain unchanged this month, Deputy Prime Minister Hoang Trung Hai said in an interview with local press on November 7


Recently, Electricity of Vietnam (EVN) proposed an increase in power prices to start in November.

Accordingly, average power prices will be raised from VND1,242 ($0.59) per kWh to VND1,403 ($0.67 ) per kWh.

Under Decision No 24, electricity prices can be adjusted at least every three months. However, adjustments must first undergo careful consideration by relevant ministries and sectors, Hai said.

Power price adjustments need to take into account considerable efforts having been made in stabilising the macro-economy, curbing inflation and ensuring social security, he said.

Hai called on the Ministry of Industry and Trade to provide EVN auditing results and production costs to the public. If the ministry fails to do this, a price rise can not well be a reasonable suggestion, he affirmed.

Any form of price adjustment needs to be transparent and based on a competitive market, Hai noted.

Tran Dinh Long, general secretary of the Vietnam Electricity Power Association, revealed to Dai Doan Ket (Great Unity) newspaper that the industry and trade ministry has to consider price changes on principles of information transparency.

Consumers are ready to accept price rises if EVN calculations are reasonable, Long added.

Hai made an additional call on the ministry to establish three power generation corporations under the EVN before November 15.

The ministry will also be required to set up a national power regulatory council this month.

During the ministry’s online meeting on November 7, the Vietnam National Coal and Mineral Industries Group (Vinacomin) asked for permission to increase the price of coal sold to the power sector.

Nguyen Quang Bien, Vinacomin deputy general director, said that in the first 10 months of the year, domestic coal consumption reached 36.5 million tonnes, 11 per cent higher than the same period last year.

Currently, the price of coal sold to the power sector makes up only 50 per cent of production costs and with a 30 per cent rise per year, it will take around three years for prices to equal costs, Bien said.

Therefore, production costs are currently being compensated by profits generated from coal exports.

However, coal exports are expected to drop strongly from 13 million tonnes in 2012 to 5 million tonnes during 2014-15 while the volume of coal used in generating power is estimated to reach 35 million tonnes out of 55 million tonnes turned out.

Thus, coal prices will need to be adjusted in 2012 to ease financial pressures, Bien noted.

Deputy director of the ministry’s Heavy Industries Department Nguyen Khac Tho said that coal and power price adjustments must depend on the health of the economy.

Before raising coal prices, enterprises were called upon to seek measures in curbing illegal coal exports as well as strengthen cost management.

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