Power price hikes in the offing: minister

The hike would be implemented at an appropriate time and the prices of essential items would gradually be adjusted based on the market.

The ministry had envisaged four scenarios for power price schemes this year, and would submit them to the Government’s Price Management Committee.

Nguyen Anh Tuan, head of the ministry’s Electricity Regulatory Authority, said those scenarios were based on the predicted growth rates of electric energy demand and the volume of water received by hydropower plants.

In all scenarios, the total electricity generated from coal-powered thermal plants would increase by 116 million kWh, putting pressure on EVN to hike power tariffs.

The country’s annual growth in electricity demand is above 10 percent and even higher in some areas.

Vietnam still relies largely on hydropower and thermal power plants for its electricity needs. Thermal plants are expected to account for over 48 percent of the power production this year.

An EVN official, who asked not to be named, said while the corporation was capable of supplying enough electricity, pricing was a big problem.

According the official, the output this year is estimated to be 242-243.5 billion kWh and the ministry could mobilise another 2-7 billion kWh from diesel-powered sources at high prices. But its main mission is to ensure sufficient power supply.

Electricity from oil costs nearly 5,000 VND (0.2 USD) per KWh to produce but it is sold to households for just 1,720 VND (0.123 USD), which causes a big loss to producers.

Another factor that could affect electricity prices this year is a 5 percent increase in coal prices that came into effect late last year.

Analysts said coal accounted for a significant proportion of electricity production cost, and so this would exert huge pressure on the power sector. 

Deputy Prime Minister Vuong Dinh Hue, head of the Steering Committee for Price Management, said power prices should be adjusted in such a way that it is appealing enough to attract investments in electricity production.

But he warned that costs should be controlled by relevant ministries in a transparent manner so that higher tariffs would not come as too heavy a burden on businesses and other consumers.