MOIT lends a hand to EVN to raise electricity price

Mar 12th at 13:13

12-03-2013 13:13:39+07:00

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.

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 spontaneously.

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.