Raise electricity prices to offset losses for power sector?

VCN- The retail price of electricity has been adjusted up by 6.08% from December 1st, and from now until 2020, the electricity price will continue to "escalate", creating great pressure for production and business activities of enterprises as well as people's lives.
raise electricity prices to offset losses for power sector

Electricity price increases affect to the whole the economy

The average retail electricity price was adjusted up by 6.08% from December 1st . Economist Ngo Tri Long acknowledged that electricity prices will certainly affect the entire economy. This creates more obstacles for enterprises, because electricity is an important input factor for all industries. The most visible impact is the CPI in December as well as in 2018. For consumers, the cost will also be more from the increase in electricity prices, as well as the situation of commodity prices increased by the price of electricity.

Given the more detailed calculation of the impact of electricity price increases on the economy, Mr. Nguyen Anh Tuan, Director of the Electricity Regulatory Authority (Ministry of Industry and Trade), said, the Prime Minister has assigned the relevant ministries to study and review. According to calculations, in the year 2017, the adjusted electricity prices increased the production index by 0.07% and the CPI increased by 0.08%.

Regarding this issue, Mr. Vo Quang Lam, Deputy General Director of Electricity of Vietnam (EVN) added, It is expected that in 2018, the increase in electricity retail price will affect the CPI increase 0.1% and GDP 0.66%.

Nam Dinh Textile and Garment Corporation is a unit directly producing and trading, using a lot of electricity. According to Mr. Nguyen Manh Hung, CEO of the enterprise, electricity prices currently account for 30-35% of the cost price. Therefore, the increase in electricity prices will naturally increase the cost of production. The object to suffer in the end is still the consumer. However, in order to ensure competitiveness, the enterprise also has to carefully calculate the use of electricity for maximum savings. Long-term plans, the enterprise also takes into account replacing old equipment because it consumes large amount of power.

Other representatives of agricultural and seafood exporters said that the electricity price increase will give businesses quite "headache". Although While production costs increase, but the price of products can not always can be increased. Electricity price increases can mean the profit of enterprises decrease. At this point, enterprises will calculate the agreement, negotiate gradually to increase the price but the negotiation is not simple and it takes a lot of time.

Eliminate monopoly

It is expected that not only this price increase, but from now until 2020, electricity prices will gradually be adjusted up. This means that the electricity price increases to businesses and people's lives will last longer. One of the reasons is that, EVN is still "hanging" a huge loss due to exchange rate differences over the years have not been allocated to electricity prices.

According to a report of the Ministry of Industry and Trade, in 2016, EVN reported a profit of 2,658 billion VND from its production and business activities, but electricity production still lost nearly 594 billion VND. Remarkably, at present, there are still more than 9.7 trillion VND unrealized exchange rate difference in electricity prices. Further explanation on this issue, Mr. Nguyen Anh Tuan said, on demand, losses are to be included in the tariff immediately, but the Government does not do so to avoid huge pressure on the market. The Ministry of Finance has allocated the above losses for each year and has a specific roadmap to include electricity prices. In the past, adjustment was only introduced into the price of electricity.

Mr. Vo Quang Lam added, according to the Prime Minister, from now to 2020 will gradually bring the exchange rate difference into the electricity price. "When the input parameters fluctuate, the average electricity price increases by 3% or more compared to the current price, and the electricity price can be adjusted up. The average price adjustment period is 6 months from the latest electricity price adjustment. Therefore, if the increase is faster, it will have to adjust prices in May, 2018, Mr. Lam said.

Some commentators have said that over the past two years, the power sector has to hold back price increases. Therefore, the power price adjustment is unavoidable. However, the key is to remove monopoly power in all stages of electricity activities, especially in power transmission, and gradually move to socialization to ensure optimal electricity prices.

With regard to this issue, as a member of the EVN Business Costs Audit Team in 2016, Mr. Nguyen Minh Duc, Legal Department (Vietnam Chamber of Commerce and Industry) added, the adjustment of electricity prices in the coming time should also try to be more transparent. "The annual cost of electricity production and business has been represented by the buyer of electricity is the Vietnam Association of Standards and Consumer Protection, however, at the stage of increasing electricity prices with no increase, there is no buyer participation only by EVN and the State. Options to raise electricity prices before publication are also classified as confidential documents. To make it more transparent, it is necessary to publicly calculate the price increase of electricity as well as supplement the participation of the buyer's representative in this stage", Mr. Duc emphasized.

Standing on behalf of consumers, Mr. Nguyen Manh Hung, Vice President and General Secretary of Vietnam Standards and Consumer Protection Association, said that he himself was surprised when the electricity price increased from the last 1st December. The rise in electricity prices is not only directly related to consumer spending, but electricity is also the input of the manufacturing industry, so consumers also have to accept more price increases. Therefore, in the time to come, in the adjustment of electricity prices, more careful preparation should be available for consumers to easily approach the price increase. At the same time, Mr. Hung expressed his sympathy with the view of enhancing transparency in raising electricity prices by letting the representatives of electricity buyers participate in contributing to the adjustment of prices.

By Thanh Nguyễn/ Huu Tuc

Related News

Which authorities have the right to request taxpayer information?

Which authorities have the right to request taxpayer information?

VCN - The General Department of Vietnam Customs has recently issued a response to the Asset Valuation Council for Criminal Proceedings of An Giang Province concerning the provision of information on imported goods prices for asset valuation purposes.
Strictly monitor market fluctuations to appropriately adjust prices

Strictly monitor market fluctuations to appropriately adjust prices

VCN – In the second quarter and the remaining months of 2024, the price management and administrations need to effectively control inflation and remove difficulties for production and businesses, the Ministry of Finance reports.
Ministry proposes new electricity tariffs

Ministry proposes new electricity tariffs

The Ministry of Industry and Trade (MoIT) has released a draft of the Prime Minister's decision on the structure of retail electricity tariffs for public feedback. The draft proposes a new pricing scheme based on a percentage of the average retail price of electricity for different groups of users.
Positive signals in price management

Positive signals in price management

VCN – The socio-economic results in the first four months of 2023 show that the Consumer Price Index (CPI) in Vietnam is gradually trending down over the months. This is a positive signal for the CPI in 2023 to achieve the target.

Latest News

Vietnam’s GDP growth to outpace region peers: Oxford Economics

Vietnam’s GDP growth to outpace region peers: Oxford Economics

Vietnam will be the standout among the top six ASEAN economies (ASEAN-6), growing at a faster pace relative to its peers during the next few years, according to the Oxford Economics, a global economic advisory firm.
Government Party Organisation must be elite, streamlined, ensure effective operations: PM

Government Party Organisation must be elite, streamlined, ensure effective operations: PM

Prime Minister Pham Minh Chinh, head of the Government Steering Committee for summarising the implementation of Resolution 18-NQ/TW of the 12th Party Central Committee, which seeks to streamline the political system for greater efficiency and effectiveness, chaired the fifth meeting of the committee in Hanoi on December 19.
Vietnam among Asia’s 15 largest economies

Vietnam among Asia’s 15 largest economies

The statistical visualisation platform Seasia Stats recently ranked Vietnam among the top 15 economies in Asia, with projected economic output reaching some 506 billion USD in 2025.
Chinese media praises Vietnam’s economic achievements, outlook

Chinese media praises Vietnam’s economic achievements, outlook

Chinese media outlets, including The Paper, CRI, Sohu, Sina, the Guangdong E-Commerce Association's website, and BWC, have published numerous reports and analyses highlighting Vietnam’s remarkable economic achievements in 2024 and its promising outlook for 2025.

More News

Vietnam International Defence Expo 2024 opens

Vietnam International Defence Expo 2024 opens

The Vietnam International Defence Expo 2024 is due to kick off on December 19 morning at Gia Lam airport in Hanoi, gathering more than 200 units and enterprises from over 30 countries worldwide.
Vietnam sees growing number of Chinese investors: forum

Vietnam sees growing number of Chinese investors: forum

With sustained economic growth over years, Vietnam continues to impress and attract an increasing number of Chinese investors, participants said at an investment and trade forum between Ho Chi Minh City and China’s Guangdong-Hong Kong-Macao Greater Bay Area (GBA) in the southern economic hub on December 17.
Border gate planning: Issues for Lang Son

Border gate planning: Issues for Lang Son

VCN - In order to exploit and promote the potential and economic strengths of border gates, helping to realize the aspiration of turning Lang Son into a "green border city" with a "border gate urban area", the requirements for openness and connectivity in border gate planning need to be clearly oriented, allocated and used effectively. In particular, the planning of border gate areas must be associated with the goal of digital transformation, in which human resources, equipment and infrastructure are prioritized.
Vietnam’s GDP growth poised for robust growth in 2024: officials

Vietnam’s GDP growth poised for robust growth in 2024: officials

With just days remaining in 2024, the Vietnamese economic landscape looks promising, with the GDP growth expected to exceed the set target of 7% thanks to concerted efforts by ministries and sectors, according to Deputy Minister of Planning and Investment Tran Quoc Phuong.
Total retail sales of goods, services in 11 months up 8.8%

Total retail sales of goods, services in 11 months up 8.8%

Vietnam’s total retail sales of consumer goods and services saw a year-on-year increase of 8.8% to more than 5.8 quadrillion VND (228.4 billion USD) in January – November, according to the General Statistics Office (GSO).
Vietnam should tap domestic market for economic growth: insiders

Vietnam should tap domestic market for economic growth: insiders

Vietnam's domestic market still holds significant untapped potential, and stimulating domestic consumption is a vital strategy to drive economic growth in the near future, according to economic experts.
Prioritizing semiconductor workforce training

Prioritizing semiconductor workforce training

VCN - Vietnam is well-positioned to participate deeply in the global semiconductor industry. Experts believe that developing a skilled workforce in microchips and semiconductors should be a long-term priority to effectively capitalize on this opportunity.
Deputy PM urges extra efforts to remove Vietnam from money laundering grey list

Deputy PM urges extra efforts to remove Vietnam from money laundering grey list

Deputy Prime Minister Ho Duc Phoc on December 12 urged ministries and sectors to do their utmost to implement the Financial Action Task Force (FATF)’s 17 recommendations to lift Vietnam out of its list of Jurisdictions under Increased Monitoring (grey list) related to money laundering.
Vietnam pledges more contributions to UN humanitarian relief efforts

Vietnam pledges more contributions to UN humanitarian relief efforts

Deputy Minister of Foreign Affairs Do Hung Viet affirmed Vietnam's strong commitment to humanitarian relief efforts, helping people recover their lives after natural disasters and catastrophes, while addressing the 2025 Central Emergency Response Fund (CERF) High-Level Pledging Event in New York on December 10.
Read More

Your care

Latest Most read
Vietnam’s GDP growth to outpace region peers: Oxford Economics

Vietnam’s GDP growth to outpace region peers: Oxford Economics

Vietnam will be the standout among the top six ASEAN economies (ASEAN-6), growing at a faster pace relative to its peers during the next few years, according to the Oxford Economics, a global economic advisory firm.
Government Party Organisation must be elite, streamlined, ensure effective operations: PM

Government Party Organisation must be elite, streamlined, ensure effective operations: PM

Prime Minister Pham Minh Chinh, head of the Government Steering Committee for summarising the implementation of Resolution 18-NQ/TW of the 12th Party Central Committee, which seeks to streamline the political system for greater efficiency and effectiveness, chaired the fifth meeting of the committee in Hanoi on December 19.
Vietnam among Asia’s 15 largest economies

Vietnam among Asia’s 15 largest economies

The statistical visualisation platform Seasia Stats recently ranked Vietnam among the top 15 economies in Asia, with projected economic output reaching some 506 billion USD in 2025.
Chinese media praises Vietnam’s economic achievements, outlook

Chinese media praises Vietnam’s economic achievements, outlook

Chinese media outlets, including The Paper, CRI, Sohu, Sina, the Guangdong E-Commerce Association's website, and BWC, have published numerous reports and analyses highlighting Vietnam’s remarkable economic achievements in 2024 and its promising outlook for 2025.
Vietnam International Defence Expo 2024 opens

Vietnam International Defence Expo 2024 opens

The Vietnam International Defence Expo 2024 is due to kick off on December 19 morning at Gia Lam airport in Hanoi, gathering more than 200 units and enterprises from over 30 countries worldwide.
Mobile Version