Vietnam makes way for power price hikes of up to 10 percent

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The government has given power monopoly Electricity of Vietnam greater leeway to hike prices without prior approval, allowing it to increase them by 7-10 percent, up from the current 5 percent.

The change takes effect January 10 next year.

According to the new regulations approved by Prime Minister Nguyen Tan Dung last week, EVN must wait six months between price hikes.

The new regulation stipulates that when changes in fuel prices and exchange rates make basic prices lower than the current prices, EVN should reduce the latter correspondingly.

They can increase retail prices correspondingly when basic prices rise by 7-10 percent.

Price hikes can be made only after the stability fund is exhausted.

If the increase is more than 10 percent, the firm has to propose the new prices to the Ministries of Industry and Trade and Finance.

The finance ministry will evaluate the proposed prices within 10 days, before sending its opinion to the trade ministry. The latter will have 10 more days to compile and submit the proposal to the prime minister for approval, the new regulations stipulate.

But many experts said last year, when favorable hydrological conditions helped EVN earned profits of VND6 trillion (US$284.4 million), it did not reduce prices. Therefore, new regulations will make power prices more likely to rise than fall.

Since December 2011, electricity prices have increased four times by 5 percent each, including twice in each July and December of last year. The latest rise hike from VND1,437 to VND1,508 per kilowatt an hour took effect August 1.

In a statement one day earlier, EVN said that the prices rose in order to offset the cost of input materials such as coal and gas.

Dung approved the range of retail power prices for the 2013-2015 period, capping the rate at VND1,835 per kilowatt an hour. 

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