Ministry of Finance’s comments on electricity price reduction for three months 

VCN - Agreeing with the policy on temporary electricity price reduction to support entities affected by the Covid-19 pandemic in the short term, the Ministry of Finance said that Vietnam Electricity (EVN) must have a balanced plan to avoid losses and re-suspend losses, causing pressure on price increases in 2021.

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It is estimated that the total revenue from electricity will fallnearly VND 11,000 billion. Photo: internet.

At the same time, the Ministry of Industry and Trade also issued Report No. 22 / BC-BCT dated April 1, 2020 to the Prime Minister proposing a 10-20% reduction in electricity price for some entitiesforthree months (from April 2020).On April 1, 2020, EVN issued Official Letter No. 2015 / EVN-KD reporting on the program on electricity price reduction and social welfare to support customers affected by the Covid-19 pandemic, with a reduction of from 10 to 50 to 100% for a period of six months (from April to September 2020) with a total support of about VND8 trillion.

On the afternoon of April 12, the Ministry of Industry and Trade informed that the Government agreed with the plan to reduce electricity price to support businesses and people to fight the Covid-19 pandemic for three months, from April to June 2020.

Shortly thereafter, the Ministry of Industry and Trade drafted a detailed guiding document and consulted relevant ministries and agencies to complete it in accordance with the law, before officially issuing the EVN’swritten directive on cutting electricity prices.

Specifically, customersusing electricity forproduction and business activities will have reduced electricity price at all peak hours, normal hours and off-peak hours with a discount of 10% compared to the current unit price.

For customers using electricity for daily life, a discount of 10% compared to the unit price for daily-life electricity price grades from one to four (below 300 kWh / month).

For customers using electricity for the service of tourist accommodation establishments, the electricity price shall be reduced from the electricity price applicable to business customers of this service to the price applicable to production households.

In addition, EVN will also conduct a 100% reduction of electricity bill for isolated areas, concentrated medical examination and treatment facilities for patients infected with Covid-19; a 20% reduction of electricity bills for medical examination, treatment and testing facilities for patients suspected of Covid-19 infection; and a 20% reduction of electricity bills for hotels and tourist accommodation facilities used as isolated areas for patients suspected of Covid-19 infection or infected with Covid-19.

Motivated by the above-mentioned solutions, the Ministry of Industry and Trade estimates that the total revenue after electricity price reduction for electricity users will be nearly VND11,000 billion, of which consumers using electricity for production and business will supported a reduction of about VND6,100 billion, households VND2,900 billion, and tourist accommodation establishments VND1,800 billion. EVN will directly reduceelectricity bills to facilities serving Covid-19 prevention by VND100 billion.

Under the current law, the Ministry of Industry and Trade is the agency responsible for state management over electricity and use, including price. Electricity is on the list of goods and services the State stabilizes prices on the basis of the principle of "Ensuring reasonable cost compensation for realistic production and business in line with market prices and Government’s policies on socio-economic development in each period with impacts on prices of goods and services.”

Speaking at an online meeting between the Government and localities on the morning of April 10, Minister of Finance Dinh Tien Dung agreed on the policy of reducing electricity prices for some entities affected by the Covid-19 pandemic.

However, he also emphasized thatthe fund to implement the reduction is a direct reduction in EVN's revenue, thereby reducing the State budget revenues from taxes and profit after taxes compared to the estimate.

The Ministry of Finance proposes EVN to have a balanced plan to avoid losses and re-suspend losses causing pressure on price increases in 2021, especially it will affect other sectors as input of electricity production (coal for electricity and gas production).

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At the same time, it is necessary to review and recalculate the cost of electricity purchase in 2020, inputs such as coal, oil, gas, exchange rate, output, structure of electricity output to reduce the price.

By Hong Van/ Huyen Trang

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