MOIT Issues Details of New Power Price Hikes

The Vietnamese Ministry of Industry and Trade Feb 26 issued a circular regulating price selling prices in 2009 and instructing implementation of the power price hikes on average 8.92 per cent to VND948.5 (US$5.57 cents) per kWh excluding value-added tax (VAT) from current VND860 (US$5.05 cents) from Mar 1.

 

New power price for households will be applied progressive hikes ranging from VND600/kWh to VND1,790/kWh, excluding VAT. The government will subsidize 35 per cent-40 per cent of the price for poor households and low-income families used the first 50 kWh of electricity in order to avoid negative affects from the price soar.

 

The new hikes for production and business sectors will be based on voltage levels and using hours (low-normal-peak hours) and range from VND455/kWh to VND3,100/kWh, excluding VAT. According to the MoIT, low hours will be from 22:00-4:00 daily, normal ones will be from 4:00-9:30, 11:30-17:00, and 20:00-22:00 from Monday to Saturday and from 4:00-22:00 every Sunday, and rush hours will be from 9:00-11:30, and 17:00-20:00 from Monday to Saturday.

 

Rural power traders who could not sell electricity at the new price due to their conditions will be allowed to temporally apply ceiling prices of VND700/kWh until Aug 31 this year.

 

Vietnam is estimated to pay an additional VND6.4 trillion (US$376.47 million) for electricity this year due to the government's decision to raise domestic average retail power price by 8.92 per cent, Deputy Minister of Industry and Trade Do Huu Hao said at a meeting on power price hike held Feb 17 in Hanoi.

 

Of the total additional expenditure for power during this year, production and business sectors will be charged VND2.3 trillion (US$135.29 million) with power price hike of between 6 per cent and 7.5 per cent; administrative offices VND300 billion (US$17.64 million) with 10 per cent; and trading & service sectors and households the remaining with 13 per cent.

 

According to the MoIT’s calculation, if prices of electricity rise less than 10 per cent, the country’s GDP will be cut by 0.05 per cent to 0.07 per cent and inflation will be pushed up 0.25 per cent and 0.3 per cent this year, Mr Hao said. (Labor, Youth)