The government has decided to raise power prices by 15.28 percent this March, a smaller hike than the one sought by state utility EVN.
An official of the Industry and Trade Ministry said the increase of 15.28 percent was approved after the government considered both the cost factor in power production and how the price hike would affect inflation and daily lives.
The hike will bring average power price to VND1,241 per kilowatt-hour. Last year the country raised its power prices by 6.8 percent, after an increase of 8.92 percent in 2009.
For this year, the Ministry of Industry and Trade had proposed an increase of between 18 and 30.3 percent while EVN wanted a 20-40 percent hike.
The government has said EVN is now selling electricity at 30 percent to 40 percent lower than production costs.
Officials at the Finance Ministry estimate that even after a 15 percent power hike, EVN will continue to suffer huge losses.
Ta Van Huong, head of the Energy Department under the Ministry of Industry and Trade, said the ministry will announce specific power prices for household use and commercial use by March 1. It is likely that household consumers will face a larger price hike than enterprises, he said.