Electric bill cut plan to ease concerns
Electric bill cut plan to ease concerns
The Ministry of Industry and Trade has made a proposal to reduce power tariffs in a bid to ease financial pressures for businesses struggling to pay operating expenses during the health crisis.
Proposals have been made to abolish peak electricity time regulations and drop prices, photo Le Toan
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According to the Ministry of Industry and Trade’s (MoIT) proposal last week to the prime minister, companies and millions of vulnerable households are set to get relief on their energy bills. The total relief package, which is expected to take effect immediately, is estimated at VND11 trillion ($478.2 million) and should last for three months.
The plan includes a 10 per cent cut for producers and businesses, costing around VND6.1 trillion ($265.2 million), as well as favourable terms to the value of VND2.9 trillion ($126 million) for households with energy consumption of less than 300 kilowatt hours a month.
Households which use more than this would be charged the current rate, as they are classified as high-income earners less affected by COVID-19.
Meanwhile, hotels and restaurants would enjoy similar reductions at a cost of VND1.8 trillion ($78.3 million), and hospitals treating virus patients and quarantine camps would be provided with free electricity.
Economist Nguyen Minh Phong said that welcome must be given to the government’s efforts to support consumers, particularly those in vulnerable circumstances or who need extra support. It will put an end to one-way price hikes, as well as provide protection for the investment climate.
“This is a necessary action when the country is also launching many relief packages for businesses to help reduce costs,” said Phong.
Previously the Ministry of Planning and Investment proposed abolishing regulations on peak electricity times (9.30am-11.30pm), narrowing electricity price scale, and reducing prices until October.
Speaking to VIR, two associations of intensive-power industries in steel and cement said that the proposal should be granted with immediate effect in order to stabilise production and prevent decline. They also called for policies on tax exemption, tax reduction, and lending rate reduction to be implemented quickly for the affected business community. Executive chairman of PEB Steel Sami Kteily said that the MoIT proposal to cut electricity bills by up to 10 per cent is good news, and will provide some relief to many businesses that are struggling to pay fixed as well as variable operating expenses.
“However, now that oil prices have dropped, state-run Electricity of Vietnam can recalculate power prices and offer further cuts,” said Kteily. “It is apparent that the government is doing its best to help the business community cope with the repercussions of the coronavirus outbreak, but as local steelmakers in our industry are facing extreme hardships and are blocked from both import and export lines, we are expecting additional policies such as loan extensions and a reduction in lending rates. Moreover, a fall in corporate income tax rates would mean a lot to businesses,” he added.
Electricity costs account for about 8 per cent of production costs, while average profits are just 5 per cent of revenue for the steel and cement industries.
In regard to the hospitality sector, Nguyen Tien Dat, owner of Lotus House in Hanoi said, “We highly appreciate the government’s determination to control the spread of the virus, because during an pandemic, it is very difficult to conduct business and recover completely. We are in favour of the relatively close care and direction from the government in providing packages to support the business community.”
Industry experts stated that the tariff reduction would not affect the country’s electricity supply across the whole year.
