Ministry of Finance senior expert Ngo Tri Long said that an electricity price increase proves to be unavoidable; however, an 8-9.8% price increase would be too sharp.

You have submitted a lot of projects on raising electricity prices. What would you say about the new proposal under which the electricity price will increase by 8-9.8%?

In the suggested price increase plan, the plan compilers said that the currently applied prices are not high enough to cover all expenses, thus Electricity of Vietnam does not have enough to pay debts and take out new loans.

However, it has been pointed out that we do not clearly know all expenses of electricity production. Who will come forward and verify the accuracy of expense calculation?

Electricity production proves to be a monopoly industry; therefore, it is necessary for the state to define prices to ensure benefits for all. As far as the products the state controls the prices for, production cost decides sale price. The prices must be high enough to cover expenses and help enterprises survive and expand production.

Therefore, adjusting electricity prices is a must. However, as electricity is an essential commodity which has impacts on people’s lives, the state must think things through thoroughly before approving any price increase plan.

Do you think that the suggested electricity price increases are reasonable?

In order to answer the question, EVN has to show if it has been organising production well and doing necessary things to minimise losses in transmission. Consumers will not accept the price increases if they don’t know anything about those factors.

I think that not only EVN, but state management agencies, consumer associations and experts need to sit together to discuss these factors.

EVN has every reason to ask for an electricity price increase as input material prices have increased. However, the average input material price, not the highest price, needs to be used to calculate sale prices.

EVN initially suggested a price increase of 16-20%, but the Electricity Regulatory Authority of Vietnam then lowered the suggested price increase to 8-9.8%. What would you say about the price adjustment?

It is clear that ERAV has to lower the suggested price increases. However, we still need to reconsider if the lower suggested price decreases are convincing.

I think that we need to set up a council to verify electricity production costs containing experts in electricity production and finance experts.

EVN said that if the sale price is below UScent7.5/kwh, this will not attract investors to the power sector as the production cost is between UScent7-7.2/kwh, while the currently applied price is just UScent4.8/kwh only, which is lower than the average level in the region. What do you think about that?

In the context of input material price increases (coal, petrol), lower proportion of hydropower, devaluating VND, it is a right move to raise the electricity price. However, the question is how much to adjust the prices by. 

Some experts say that now is the right time to raise the electricity price as commodity prices have been decreasing. However, I have to remind you that prices have been decreasing from high levels, not normal levels. The electricity price increase will surely put difficulties on businesses and individual consumers.

Do you think that the electricity price increase will go against the efforts of the government to stimulate demand?

As Vietnam has been integrating into the world, Vietnam’s prices need to be equal to those of the world, sooner or later. However, I think that we need to regulate the electricity price in a careful way, step by step.

The 16-20% price increase plan suggested by EVN proves to be the shocking one. The 8-9.8% increase by ERAV is lower, but still very high, especially as EVN still can make profit.

The electricity price increase planner said that the price increase will slow the GDP growth rate by 0.05-0.07%, while this will make the CPI increase by 0.25-0.3%. Do you think that the calculation is reasonable?

For sure the electricity price increase will slow down GDP growth and make CPI increase. However, the increases and decreases remain unclear as we don’t have any concrete figures to explain this in a convincing way.

(VNN)