Businesses exploring ways to bear power tariff hike
Businesses exploring ways to bear power tariff hike
Restructuring production processes and raising workers' awareness about saving energy are some of the measures that businesses are following to adapt to the new electricity price hike.
Under a decision approved by Prime Minister Nguyen Tan Dung last week, electricity prices have been raised 7.5 per cent to an average of VND1,622.05 per kilowatt-hour (kWh) from March 16.
Nguyen Anh Tuan, Director General of the Ministry of Industry and Trade's Electricity Regulatory Authority, said the hike will translate into an additional VND4,800 ($0.22) for each household consuming 50 kWh of power a month, while those using 100 kWh a month will have to pay about VND9,800 ($0.46) more.
Since the price rise will hurt low-income and disadvantaged families, State financial support for the electricity bills of these households will be increased by VND153 billion ($7.28 million) a year from the current VND1 trillion ($47.61 million), he added.
The price augmentation, however, will impact big power-consuming industries the most.
Truong Quoc Huy, General Director of the Vicem But Son Cement Joint Stock Company, said his firm uses about 100 kWh of electricity to produce one tonne of cement. Since power prices for manufacturing are higher than those charged to households, the power price hike is likely to impact production costs and selling prices.
Electricity expenses account for about 7 per cent of steel billet production costs. Between 400 and 600 kWh of power is needed to produce one tonne of steel billets, according to Chairman of the Vietnam Steel Association Ho Nghia Dung.
He estimated that the 7.5 per cent hike will raise steel production expenses by VND80,000 to100,000 ($3.75 to 4.68) per tonne, adding that it will also burden steel makers, who are already grappling with an array of challenges, such as competition posed by lower prices of steel billets imported from China and Japan.
Vu Ngoc Bao, Vice Chairman and General Secretary of the Vietnam Pulp and Paper Association, said the power price escalation will cause a 0.5 to 0.8 per cent rise in the industry's manufacturing costs.
Huy and Bao suggested that businesses minimise other expenses and consider accepting a profit decline to account for the power price increase.
The Director of the Ha Noi Battery Joint Stock Company Pham Van Nghia said the company has adopted measures to save electricity as part of its operational strategy to cut production costs.
"Save electricity slogans have been hung at all the company's workshops and workers have been asked to turn off all machines and equipment after work and limit the use of electricity where necessary," he pointed out.
"An inspection is often carried out and those found flouting the electricity saving regulations will face administrative punishment," he stated.
A representative from a steel production company in the Central Highland region said the company plans to rearrange working shifts, focusing on an off-peak period to save electricity.
The work space will also be reset to make use of the daily light and natural wind to reduce the use of lamps and fans, he said.
Besides, workers will be trained to operate electrical equipment effectively to prevent electricity losses, he added.
The Chairman of the Cement Association, Nguyen Van Thien, said cement plants should apply modern technology to capture waste heat during the production process to generate clean electricity, while helping protect the environment at the same time.
For example, a cement plant with a capacity of 20,000 tonnes per day could generate around 23,000 kW of electricity from waste heat, he said.
Businesses should also improve production lines and replace the lighting system with energy saving equipment, he added.
