Vietnam’s prime minister has finally approved a power price hike of 7.5 percent starting March 16, after several official warnings that such an increase is inevitable.
The average power price will be raised to VND1,622 a kWh, according to a decision announced after a meeting on Thursday between PM Nguyen Tan Dung and officials from the Ministry of Industry and Trade.
Officials said input costs, including coal prices, have been rising sharply and the upcoming increase will save the state power giant Electricity of Vietnam (EVN) from a possible loss of VND12 trillion (US$562 million) in 2015.
They said the hike is also to help the economy meet the inflation target of 5 percent.
Inflation has been negative for several months, an unusual trend for Vietnam.
The monopoly supplier EVN earlier proposed a price hike of 9.5 percent.
Vietnam sets different price levels for household electricity consumption. Prices increase once consumption has exceeded 100 kWh, and increase again after the 300th kWh.
According to the ministry, the new prices will require families with small power consumption to pay only an extra VND6,000 a month. Others will pay up to VND59,000 more than their current bill.
EVN has been raising prices every year, citing losses.
The price hike this time has met with opposition from economists, who accused the government of protecting the monopoly instead of the people.
Nguyen Dinh Cung, head of the Central Institute for Economic Management, said the Ministry of Industry and Trade is supposed to protect the interests of consumers instead of EVN’s.
“It is letting the public be hurt by EVN’s advantage as a monopoly.”
Cung said the ministry could have checked if the hike proposal is reasonable, and if EVN has tried to cut costs.