Wed. Nov 30th, 2022

VietNamNet Bridge – The retail electricity price may increase continuously,
which would put a heavy burden on households and businesses, since the Ministry
of Industry and Trade (MOIT) plans to give more power to the Electricity of
Vietnam (EVN) in defining the electricity price.


Vietnam, electricity price, MOIT, EVN

MOIT has caused a shock to the public by making public the draft regulation on
the retail pricing management mechanism which includes the provision aiming to
give more power to EVN.

Easier raised than reduced

The draft regulation says that once the input costs for the electricity
production increases by 2-5 percent, EVN would have the right to raise the
retail electricity price after reporting to MOIT and getting the approval from
the ministry.

Meanwhile, the government’s Decision No. 24 stipulates that only when the input
cost gap reaches five percent, will EVN be able to raise the retail price at the
corresponding levels.

Dr. Tran Dinh Long, Deputy Chair of the Vietnam Power Association, said the
MOIT’s decision would help EVN adjust the retail prices more timely, which truly
reflect the actual production costs.

However, according to Long, the new regulation would lead to the fact that the
electricity prices would be adjusted many times within a year. If so, the
electricity price would be changed regularly, thus making it impossible for
businesses to set up their business plans. This would also make people’s lives
unstable and upset.

Therefore, Long believes that EVN should not abuse the power for adjusting the
electricity price in order to change the prices regularly.

The attempt by MOIT to give more power to EVN to adjust the electricity price
has raised a worry that the electricity price would escalate and become
uncontrollable. To date, EVN remains the only electricity retailer, which means
that people would have no other choice than use the electricity to be provided
by EVN. They don’t have the right to choose reasonable service providers and the
price levels suitable to them.

Dr. Nguyen Minh Phong, a well-known economist in Vietnam, also said that the
MOIT’s decision would pave the way for EVN to raise the electricity price

Especially, he said, MOIT has only given the power to EVN to raise the retail
prices, while it has not mentioned about what EVN needs to do in case the input
production costs decrease.

“The draft legal document aims to give a kind of “soft power” to EVN which helps
EVN raise the sale prices. It’s obvious that MOIT just tries to protect EVN’s
benefits, while it has not paid attention to the people’s and society’s
benefits,” Phong said.

Electricity price stabilization fund?

The government’s Decision No. 24 mentioned the establishment of a fund which
aims to stabilize the electricity prices, a kind of fund similar to the petrol
price stabilization fund.

The decision says that the money for the electricity price stabilization fund
would be sourced from the electricity sale every year. However, the MOIT’s draft
regulation does not include the articles about the fund.

In fact, the model of price stabilization funds has not been highly appreciated
by experts. Dr. Phong has pointed out that too many problems still exist, and
such funds cannot fulfill the tasks of stabilizing the market assigned to them.

“The most important thing that Vietnam needs to strive to is a transparency
pricing mechanism,” Phong said.

Phuoc Ha

By vivian