EVN price setting proposal receives wide-scale challenge

The MoIT has submitted the proposal to the prime minister the mechanism to adjust the electricity selling price to replace the currently applicable Decision No.69/2013/QD-TTg.

Accordingly, the MoIT suggested allowing EVN to make upward revisions to power tariffs every three months by a range of 3-5 per cent in case there are changes to the basic input parameters, without reporting to the MoIT. Thus, the annual maximum rise would be capped at 20 per cent. For a higher rise, EVN has to ask for the PM’s approval.

Meanwhile, according to the current decision in effect, the minimum interval between two electricity price hikes is six months, with a range of at least 7 per cent. EVN must secure the MoIT’s approval to increase the selling price of electricity by 7 to 10 per cent. To raise the tariff by more than 10 per cent, EVN has to make a dossier on the price plan, report to the MoIT, which will send it to the Ministry of Finance for appraisal and the PM for approval.

Responding to the draft decision, the Vietnam Chamber of Commerce and Industry (VCCI), which represents the business community, told newswire Vnexpress that an increase of 20 per cent is quite high, because since 1995 to date, the inflation rate has not once exceeded 20 per cent per year. Thus, VCCI requested the PM to reconsider the proposal.

VCCI agrees with the minimum interval of three months between two electricity price hikes, however, it proposed that EVN has to seek an official MoIT approval accompanying every hike between 3-5 per cent. Above 5 per cent, EVN would have to seek the PM’s approval.

Tran Dinh Long, deputy chairman of Vietnam Energy and Electricity Association (VEEA), told Baodatviet that because the market is always changing, the government should pick a reasonable frequency for the change of electricity retail price and the maximum change allowable, and government agencies, experts, and people have to decide on a reasonable electricity retail price.

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