EVN submits plan for 9.5 per cent increase .
The State-run EVN plans to increase the power price by 9.5 per cent next year, from VND1,508.85 ($0.07) per kWh to VND1,652.19 ($0.072) per kWh. A plan for the increase will be submitted to the Electricity Regulatory Authority of Vietnam under the Ministry of Industry and Trade (MoIT).
According to Mr. Tran Viet Ngai, Chairman of the Vietnam Energy Association, the increase is fair and reasonable. Vietnam’s thermal electricity sector is facing many problems because coal prices have increased 5 per cent, or approximately VND74,000 ($3.4) per ton. “EVN estimates overall costs have risen more than VND7 trillion ($330 million) after the coal price rose, so it has been forced to increase the electricity price,” he was quoted as saying.
He also indicated that the price increase will create the conditions needed to attract more foreign direct investment in the power sector and develop a competitive domestic power market.
Many, though, say the 9.5 per cent hike is too high and will create many difficulties and have a huge impact on consumers, especially enterprises that are energy-dependent. Mr. Le Dang Doanh, former Director of the Central Institute for Economic Management, said that a 4 per cent increase would have been reasonable.
The European Chamber of Commerce in Vietnam (EuroCham) made a number of recommendations relating Vietnam’s power sector in its White Book released on December 1, where it stated that the power price needed to rise. In the absence of a more competitive market, investors will hesitate to develop power projects because of low purchasing prices offered by EVN, which will result in power shortages becoming more frequent in the years to come.
EuroCham also recommended that bids be organized for Build-Operate-Transfer (BOT) projects and that the Power Purchase Agreement (PPA) and BOT negotiations be sped up and simplified.