Experts have stated their concern over a new draft regulation that would give the state-owned Electricity of Vietnam (EVN) more power to increase their prices.
Draft regulation on power price may result in more power price hikes
The Ministry of Industry and Trade announced a draft regulation that would allow EVN to increase power prices if their input costs are up between 2% and 5%, in stead of the current 5%, as long as they can show that the price increases are in line with their production costs.
But many experts have commented that this new regulation would simply give EVN more authority in increasing the price of power, which could adversely affect consumers.
Dr. Tran Dinh Long, Vice Chairman of the Vietnam Electrical Engineering Association, said that the regulation would allow much more leniency for EVN, who may pass down the cost to their customers.
He said, "EVN should not make hasty price hikes every time their costs go up marginally, but instead should ease up on their price increases."
Moreover, Dr. Nguyen Minh Phong, an economist, pointed out a loophole in the draft regulation that does not address the issue of price decreases in the case of lowering production costs.
“This regulation is very clear about the rights of EVN to increase their prices, but does not mention the circumstances under which prices should be lowered. The regulation seems to pay more attention to corporate interests than those of consumers," he said.
Power price stabilisation fund
Currently the law, under Decision 24, stipulates that part of the funds raised by electricity price hikes allowed under the new market-based mechanism be used to stabilise prices domestically and avoid sharp and sudden increases.
Many economists have pointed to the ambiguity of the petroleum price stabilisation fund, and said that such a system for electricity should be more specific and effective. The draft regulation, however, does not have any mention of such a fund.
Dr. Nguyen Minh Phong said the mechanism on price stabilisation funds in Vietnam is still vague does not suit the country at the current time.
Professor Tran Dinh Long said, “A power price stabilisation fund is not necessary as long as price calculation is both public and transparent. Currently the fund remains necessary in order to limit shocks to the economy from the volatility of the market," he said.
Further price hikes will undoubtedly have an effect on the national economy, and will ultimately not be in the best interest of this country's citizens, he added.
