VNBusinessNews – The Ministry of Industry and Trade Sunday assured that an increase of retail electricity prices next month would have little impact on economic growth and consumer price index (CPI).

Deputy Minister Do Huu Hao said related authorities had researched the issue carefully and decided that an increase of less than 10% would not have any significant effect on the economy.

On Saturday, the government stated on its website that retail electricity prices will increase from March 1 to VND948.5 (US 5.4 cents) per kilowatt-hour (kWh) excluding value-added tax.

The current average retail price in Vietnam is VND860 (5 cents) per kilowatt-hour, with power for commercial purposes costing more than for households.

The Ministry of Industry and Trade said the increase by 8.92% is expected to slow the country’s planned GDP growth of 6.5% by between 0.05 and 0.07%.

Meanwhile, CPI is estimated to increase by between 0.25 and 0.3%.

Prices may increase by between 3 and 4% on products from industrial sectors consuming electricity at about half their production cost.

For households, electricity bills are expected to increase to 3% from 2.64% of household expenses.

Households using under 50 kWh a month will have to pay VND2,500 more, while those using up to 100kWh, 150kWh and 200kWh will see power bill increases of VND16,000, VND18,000, VND21,000 a month respectively.

Power cuts

However, the Ministry of Industry and Trade said an increase in retail electricity prices will not mean an end to power shortages in the dry season from May to October.

The ministry said there will still be power cuts in 2009, especially in northern provinces.

No new power stations are expected in the northern provinces in 2009 while water reservoirs for several hydroelectric plants were depleted to irrigate rice paddies. Power will be transmitted from other regions to the area through the limited capacity 500-kilovolt line.

The country’s power generating capacity is expected to increase by 13 percent this year to 86.6 billion kWh. (TN)