EVN seeks shocking price hike

EVN’s proposed price hike of 9.5 per cent has come under fire from several quarters

According to Deputy Minister of Industry and Trade Do Thang Hai, the ministry will officially allow the group to raise prices after a document rubber-stamping the decision is released.

Based on the report, the government will make a final decision on how and when the power price will be increased.

Electricity of Vietnam (EVN) deputy general director Dinh Quang Tri was previously quoted as saying to local media that by the end of last year EVN had incurred more than $13 trillion ($607 million) in cumulative losses from past years, and that raising prices for customers was one of the efficient ways for the power producer to attempt to recoup some of its losses.

“The 9.5 per cent price hike is just an EVN proposal. The actual level increase will be decided by the Ministry of Industry and Trade (MoIT) based on concrete guidance from the prime minister as well as what is actually realistic,” Hai said.

Hai has attributed EVN’s proposal to the supposedly very low retail prices of power which is set at a loss-making level.

“That is not our conclusion; the assessment was reached by the World Bank and other foreign lenders after carefully considering EVN’s production cost auditing results,” Hai said, adding that low retail power prices had put repelled domestic and foreign investors from pumping money into power production.

Hai also noted that the massive price hike would benefit both businesses and the people as it would bring retail power price closer to market level, therefore inspiring more investors to step into the field.

Deputy chairman and general secretary of the Vietnam Economic Science Association Nguyen Quang Thai said the proposed 9.5 per cent hike was very high, especially when the power sector still lacked transparency in setting its production costs.

This view was echoed by the economist Le Dang Doanh who said such an increase was unreasonable amid a sharp fall in oil prices. Doanh suggests increasing retail prices by 4-5 per cent only and forming an independent council to appraise EVN’s performance to ensure reasonable price rises.