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Nov 05, 2020 / 10:50

Vietnam PM demands no power price hike by year-end

The move is aimed to keep inflation below 3% this year.

Vietnam’s Prime Minister Nguyen Xuan Phuc has asked the industry ministry to keep electricity prices stable throughout the year-end with an aim to keep inflation below 3%.

 Average retail power prices in Vietnam in 2005-2019 (blue shows retail price in Vietnam dong (VND/kWh) while orange shows retail price in US dollar). Source: EVN 

The Ministry of Industry and Trade (MOIT) needs to direct Vietnam Electricity (EVN) for the good implementation of the prime minister’s request.

Vietnam’s electricity prices have been kept unchanged from March 20, 2019. The last power price hike of 8.36% raised the average household retail power price to VND1,864/kWh (8 US cent/kWh).

The PM has also asked ministries and localities to check the supply and demand for essential goods and the prices to apply price stabilization measures when needed, getting ready for the supply of essential goods for people in the central region (where severe floods have swept), and the supply of goods in high demand on the occasion of Christmas, New Year, and Tet holiday.

 Vietnam's Doing Business 2020 Getting Electricity Score. Source: World Bank

In his analyses after the latest power price hike, Dr. Le Thai Ha from RMIT University Vietnam said the average household retail power price in Vietnam (VND1,864/kWh or 8 US cents/kWh) is comparatively lower than that of regional countries namely Indonesia (11 US cents/kWh), Thailand (12 US cents/kWh), the Philippines (15.6 US cents/kWh), Singapore (19.6 US cents/kWh) and Malaysia (9.3 US cents/kWh).

The retail power price in Vietnam is calculated based on production cost (75%-80% of total retail price), transmission cost (7%), distribution cost (10%), and additional charges (3%-8%).

Electricity prices are decided either by the MOIT if the hike is less than 5% and the prime minister when it surpasses that threshold.

In the World Bank’s Doing Business 2020 Indicators, Vietnam has shown pretty good performance in terms of Getting Electricity that measures procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs.