Vietnam power prices to surge in 2011: official

TN News

Email Print

Power prices in Vietnam are set to rise next year, according to government officials. Some in the power sector are saying that electricity prices could surge by as much as a third of its current price.

The government will decide on when to increase prices and by how much, Finance Minister Vu Van Ninh said.

"The hike will be calculated to make sure it will not have a huge impact on low-income residents," he said, noting that these residents will be "directly supported" by the government.

Details of the power hike plan have not been announced. But some experts said the increase could amount to as much as a 30 percent or more. 

They have attributed the significant spike to high input costs. They say that power production is set to rise sharply, next year.

Dang Hoang An, Deputy General Director of Electricity of Vietnam, said it's hard to tell how high power prices need to be to ensure profitability, but a 30 percent increase would not be enough to offset losses.

According to an August proposal issued by the Vietnam Energy Association, current power prices (around VND1,058 per kilowatt-hour) have failed to attract investment in the sector, so a hike of VND500 per kWh is necessary.

Tran Viet Ngai, Chairman of the Association, said the proposed hike is reasonable and the economy can handle it.

"If power prices are not raised, the power shortage problem will continue," he said. "Such a situation would be far more dangerous to the economy." 

Ngai said Vietnam's power production is expected to reach 50,000 megawatts by 2015, but the current figure is only 19,000 megawatts. In order to attract foreign investment into the sector, the country needs to raise its power prices.

The news of a power price increase, next year, has worried large power consumers.

Le Van Chung, Chairman of the Vietnam Cement Corporation, said the cement industry will be hit the hardest by the power hike.

Pham Chi Cuong, Chairman of the Vietnam Steel Association, said steel producers, which use around 650 kWh of power to make every ton of steel, will have to pass the input cost hike on to end-users.

More Business News