Markets & Prices

Last updated: Wednesday, May 15, 2019


Power Bill Hike Likely in March

Posted: Tuesday, March 12, 2019

The retail electricity price in Vietnam is expected to rise by VND143.79 per kWh on average, 8.36% higher than the current price this March, after three years of remaining unchanged.


The Ministry of Industry and Trade worked with the General Statistics Office (GSO) under the Ministry of Planning and Investment to assess impacts of electricity price adjustment plans on consumer price index (CPI), production price index (PPI) and gross domestic product (GDP) growth. Specifically, power price adjustment plans will result in an incremental growth of 0.26% - 0.31% to CPI and 0.15% - 0.19% to PPI but cause GDP to shrink by 0.22% - 0.25%.

A certified poor household will be granted 30 kWh of electricity a month. A social policies-benefited household will be granted 30 kWh a month if its monthly consumption does not exceed 50 kWh.

Based on the approved average electricity retail price bracket, the Ministry of Industry and Trade will have specific adjustments for each group of customers to have an appropriate power retail price tariff structure.

Mr. Hoang Quoc Vuong, Deputy Minister of Industry and Trade, said that any price hike of any item will affect CPI but the magnitude of electricity price impacts will be greater.

In the long term, the electricity industry needs a strong financial capacity to invest in electricity projects to serve all economic sectors.

According to the Ministry of Industry and Trade, Vietnam's electricity price in 2018 was the lowest among 25 developed and developing countries surveyed, including Laos, the Philippines, Indonesia, Cambodia, China and India.

Specifically, Vietnam's electricity prices equaled 91.9% of China and India, 81.7% of Laos, 73.5% of Indonesia, 50.4% of the Philippines and 38.7% of Cambodia.

Thus, if Vietnam’s electricity price is raised 8.36% this time, it will be on par with those in China and India.

Weighing up price hike

Electricity price plans carefully reviewed by the Ministry of Industry and Trade and the Ministry of Finance were reported to the Price Steering Committee and the Standing Office of the Government.

Mr. Nguyen Anh Tuan, Director of Electricity Regulatory Authority of Vietnam under the Ministry of Industry and Trade, said, the electricity price plan for 2019 was built with input parameters to calculate the electricity price and allocate the exchange rate differences according to Decision 24/2017/QD-TTg.

Specifically, according to the power source structure in 2019, the Ministry of Industry and Trade forecast that the total commercial electricity output will reach 211.9 billion kWh and the GDP growth rate at 6.8 % in 2019.

In the pricing plan, the Ministry of Industry and Trade instructed EVN Group to update hydrological events, water levels of hydropower reservoirs, the construction progress of power plants as of the end of January 2019.

He also underlined input factors used for the electricity pricing plan for 2019, including coal price, gas price, environmental protection tax and exchange rate.

Accordingly, the World Bank (WB)’s forecast, world coal prices are projected to fall 7.41% in 2019 from a year earlier. EVN also estimated gas prices supplied to power plants according to the WB’s data and revised some gas prices in some plants to allow all gas-fueled turbines to buy gas at market prices. The environmental protection tax on coal and oil was increased from January 1, 2019 under Resolution 579/2018/UBTVQH14 dated September 26, 2018 of the Standing Committee of the National Assembly. Foreign exchange forecasts for VND and strong currencies like US dollar, euro, Japanese yen are based on data in 2018 and forecasts in 2019.

Mr. Tuan also stated unaccounted expenses to the power price in previous years (exchange rate differentials). The degree of allocation is based on impact assessments of electricity pricing to CPI, PPI and GDP growth, as well as to economic sectors and consumers.

Given the above input parameters, the electricity pricing plan was built with different scenarios. Considered options added unaccounted expenses in previous years and matched economic development conditions, with macroeconomic indicators taken into account.

Huong Ly

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