Vietnam News Network

“The increase is unavoidable, because current electricity prices are lower than the sector’s input costs,” he said.

Hoang added EVN needed the increase for extra capital to invest in projects entrusted by the government.

Deputy General Director of EVN, Dinh Quang Tri, told reporters on Monday that the planned increase would encourage local and foreign investment in the industry.

“I think the increase may be as much as 20 percent, depending on the situation later this year,” said the deputy general director of the country’s biggest electricity producer and sole distributor.

Hoang said the increase would be gradual over one or two years, as Vietnam was striving to bring inflation down to single digits.

He said the government would consider families’ needs in the timing of the rise, adding that the Lunar New Year (Tet) holiday would be unsuitable because of the extra burden it placed on household pockets.

Tri said without an increase EVN would not be able to invest in power generation, causing widespread shortages within five years.

The Industry and Trade Minister said that the rise would also encourage more efficient use of power and do away with the need for government subsidies in Vietnam, which currently has the cheapest electricity in Asia.

The government has asked the ministry to consider a complete restructuring of the sector from production, distribution, transmission and management, he said.

Hoang also commented on EVN’s recent refusal of the government’s proposal that it invest in 13 electricity projects.

The minister said that EVN should carefully consider the proposal before asking the government to seek other investors.

Vietnam's power demand is expected to grow annually by 16 percent until 2015, according to EVN estimates.

Households are currently charged VND862 (US$0.05) per kWh, while businesses have to pay VND900.

Out of 10 million households using electricity in Vietnam, over 1.1 million use under 30 kWh of electricity each month, 1.2 million use 30-50 kWh, and 4 million use 50-100 kWh.