Vietnam will regulate prices of electricity, coal and petroleum in accordance with market fluctuations beginning in 2013, said Vuong Dinh Hue, Minister of Finance.
Electricity prices likely to go up
Hue made the announcement at a concert for electricity conservation held by the State-owned company, Electricity of Vietnam Group (EVN), on February 21.
He said that by discontinuing subsidies, prices in the country would rise, but that this would offset the industries' spiraling production costs and encourage more foreign investment.
“EVN has incurred huge losses in recent years as a result of artificial pricing mechanisms. We need to follow the market in order to improve the situation,” Hue emphasised.
Hue said that Vietnam has two major tasks in this regard: changing toward a market mechanism and curbing inflation. Although he admitted the difficulty of doing both at the same time.
As an example, he used power prices, which, he said, if increased by around 5% would add nearly 0.4% to the consumer price index (CPI).
“Reducing the national inflation rate to around 9% this year is a difficult obstacle, as the CPI is estimate to rise by 2.5% in the first two months of the year. While the country is facing rising pressures to raise prices on electricity, petroleum and coal, it may affect the current targets on inflation for the current year,” he explained.
As part of this effort, EVN has set the goal of cutting expenses by over VND1.8 trillion (USD86.29 million) this year.
