VINACHEM

As Vietnam will shortly unify, regulate, and implement a variety of new systems governing power pricing and electricity transmission, losses at state-run Electricity of Vietnam should be reduced while simultaneously ensuring a dependable energy supply for growth.

The Ministry of Industry and Trade (MoIT) will determine the average retail power price hike for this year based on the implementation of the new average retail electricity pricing bracket beginning on February 3.

Officially implemented by the MoIT, the minimum average retail energy price bracket (excluding VAT) is 7 US cents per kWh and the highest price is 10 US cents per kWh. Hence, compared to the previous frame rate, the lowest price rose by 0.9 US cents per kWh, while the maximum price climbed by 2.3 US cents per kWh.

A week ago, Tran Viet Hoa, director of the MoIT’s Electricity Regulatory Authority of Vietnam, stated that the adaptation of the average retail cost of electricity has not directly altered the retail power prices for daily life and business but is the premise for EVN’s plans to modify the retail electricity price.

“The government has promulgated the average retail price bracket for electricity since the cost range of the average total retail price of electricity is no longer sufficient,” Hoa said. “We have not yet mirrored the volatility of model parameters to the cost of electricity production and business, particularly the fluctuation in fuel price.”

Production costs grow, yet as of 2022, Electricity of Vietnam (EVN) had not increased its power pricing. As of the end of 2021, the price of imported coal for power plants began to rise, and coal-fired power now accounts for around 40 per cent of EVN’s energy output, production, and business expenses.

In addition, the exchange rate disparities recognised in the power purchase agreement for 2019-2024 are expected to be exceeding $889 million, which must be allocated and included in the yearly cost of energy generation.

Two weeks ago, the MoIT delivered a paper demanding EVN promptly come up with a strategy for the average retail price of energy in 2023 and design a roadmap and an acceptable degree of adjustment if it is required to modify the price rise.

Two months ago, EVN had proposed to the MoIT to “raise the average retail price of electricity” in order to alleviate difficulties, balance the financial situation in 2023, and implement the market mechanism for electricity.

Nguyen Tai Anh, deputy general director of EVN, said its record loss of $1.33 billion puts a strain on the electrical industry’s financial status. The cause of the huge loss last year was the steep rise in input parameters (imported coal price, blended coal price, gas price, and global oil price) and the increased cost of purchasing electricity when power plants entered the electricity market.

EVN also forecasts that the financial outlook for 2023 would worsen if power prices remained unchanged. Consequently, power firms and National Power Transmission Corporation anticipate a production and commercial loss of around $2.75 billion.

Numerous analysts opined that the amount and timing of the rise in power rates must be carefully considered so as not to compromise the 2023 socioeconomic development goals established by the National Assembly.

Vice chairman of the Vietnam Electrical Engineering Association, Tran Dinh Long, said changing power tariffs now is fair. He specifically underlined that by evaluating when and how much is acceptable to maintain macro-balance, the power business does not incur losses and assures the endurance of energy users.  – VNN –