The Hanoitimes - The hike would drive up consumer price index (CPI) by 0.29 percentage points and cause a decrease by 0.22% in the gross domestic product (GDP)
The electricity prices in Vietnam go up by 8.36% to VND1,864 (8 US cent) per kWh from today [March 20], excluding valued added tax (VAT).
The price will hike after having been kept unchanged for more than two years, according to VnExpress.
The hike is resulted from increasing input costs, including the generation of high-price electricity sources like gas-fueled, coal-fired, and diesel-fueled plants, an official from the Ministry of Industry and Trade (MOIT) told VnExpress.
Under the prime minister’s Decision 24, the MOIT is eligible to raise electricity prices by between 5 and below 10%.
An MOIT deputy minister said that the ministry chose the hike by 8.36% rather 10% to avoid negative impacts on the economy.
The MOIT and the General Office Statistics have measured how much the price hike affects the economy. Their calculations showed that an 8.36% rise would drive up consumer price index (CPI) by 0.29 percentage points and cause a decrease by 0.22 percentage points in the country's gross domestic product (GDP).
According to the MOIT, the Electricity of Vietnam (EVN) posted electricity sales in 2017 at VND289.95 trillion (US$12.6 billion) compared to VND291.28 trillion (US$12.66 billion). It means that the sole power distributor incurred a loss worth VND2.22 trillion (US$96.47 million) in the year.
Its accumulated loss by 2019 reaches VND20.74 trillion (US$901.5 million).
But local experts have criticized EVN for adding other costs, including operational expenses to the selling electricity prices, saying that there remain a lot of things of great concern in calculating the selling prices, especially a lack of transparency.
So far, the electricity prices have kept rising for years, affecting a large part of the population, mostly low-income earners.
In July 2018, Prime Minister Nguyen Xuan Phuc banned any increase in electricity prices and medical fees for the rest of the year, aiming to keep the inflation rate below 4% and achieve a GDP growth rate of 6.7% in 2018.
In late 2018, the PM delivered a firm message to the electricity sector, requiring managers and developers to ensure enough power for the economy. He warned that he would dismiss anyone who failed to keep the target achieved.