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Power price adjusted 4 times a year, consumers in state of anxious suspense   2012-07-15 - VTC

Businesses and people are now in a state of anxious suspense since they have been warned that the electricity price would be adjusted once every three months. In Vietnam, the “price adjustment” always means the “price increase.”

 

The strong opposition against the Electricity of Vietnam’s (EVN) decision to raise the retail power price by 5 percent since July 1 has been settled down, after the Ministries of Finance and Industry and Trade affirmed that EVN followed necessary procedures to increase the retail power price, and that the price increase was reasonable.



At the press conference held in early July to explain the reasons behind the decision to raise electricity price, the representatives of the ministries also informed that the electricity price could be adjusted once every three months.



Nguyen Minh Phong, a well-known economist in Vietnam, believes that this means the electricity price would increase continuously. “The electricity price has been increasing steadily and it has never decreased, despite the input cost reductions,” he noted.



Phong has pointed out that it was unreasonable to raise the power price in early July. Despite the big difficulties businesses are facing, EVN still raised power price.



“I wonder how high the electricity prices would be, once EVN is given the right to adjust the price four times a year,” Phong added.



Nguyen Trong Kien, Deputy General Director of Thach Ban Group, said that it is unreasonable to decide to raise the electricity price at this moment, when the petroleum and goods prices have been decreasing and the production has come to a standstill. In the context of high inventories, the higher power price would make the current difficulties unbearable to businesses.



According to Kien, the prices of input materials for brick and tile production have increased by 10 percent of the production cost so far this year. Meanwhile, the power price accounts for 5.3 percent of the production cost, which means that higher power price would put heavier burden on the manufacturers.



Kien also said that since the demand is very weak, he does not dare to raise the sale prices. “We accept loss for this year and try to break even, which would help us hold out and wait for the better to come,” he said.



EVN’s reasons behind power price increases unconvincing


Dr Phong has affirmed that EVN has no reason to increase the retail power price in July, since the input material prices all have been decreasing. The petroleum prices have been decreasing following the downward trend in the world market. Meanwhile, unlike previous years, EVN still can mobilize power from hydropower plants at low prices instead of buying power from other sources which charge high prices.



Phong has also rejected the argument by EVN that it needs to raise the electricity price to offset the loss it incurred in the previous year. “EVN did not show the exact figures about the loss caused by the lack of water for hydropower plants, which forced EVN to use the power from oil-run power plants,” Phong said.



Meanwhile, Tran Viet Ngai, Chair of the Vietnam Energy Association, has affirmed that EVN still can make profit, no need to raise the power price.



Ngai said that EVN now buys electricity at 700 dong per kwh on average, while its average retail price is 1400-1500 dong per kwh.



“”Vietnam does not lack electricity this year, while EVN does not have to spend money on oil to run power plants. If counting on transmission fee and additional expenses, which just account for 30 percent of the production cost, EVN would still make profit even if it does not raise retail prices,” he said.



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