Vietnam electricity prices go up after two years

By Hoai Thu March 19, 2019 | 11:26 pm PT

Vietnam raises its electricity prices by 8.36 percent on March 20, 2019. Photo by VnExpress/Thanh Nguyen

Vietnam’s power prices went up 8.36 percent Wednesday after remaining unchanged for two years.

A senior official of the Ministry of Industry and Trade told VnExpress that prices have gone up from VND1,720 (7.4 cents) per kWh to VND1,864 (8 cents), exclusive of VAT.

The ministry had said earlier this month that the Prime Minister had approved an increase in power prices. Vietnam’s power consumption has been increasing by about 10 percent each year, but generation has not kept pace.

The hike could lower Vietnam’s GDP this year by 0.22 percent and increase its consumer price index (CPI) by 0.29 percent, the ministry said. Vietnam's CPI increased 3.54 percent in 2018.

Vietnam’s electricity prices have almost doubled in the last decade, but the last time they were raised was in 2017.

According to Vietnam Electricity (EVN), its overall production costs rose by VND5.48 trillion ($235.46 million) year-on-year in 2018 mainly due to exchange rate differences in electricity purchase contracts and gas price increases.

The utility expects costs to rise by VND15.25 trillion ($655.34 million) in 2019. This is not to mention other expected increases in costs of production, as well as coal and electricity imports, EVN said.

Hoang Quoc Vuong, Deputy Minister of Industry and Trade, had noted earlier that Vietnam's electricity prices were 8.1 percent lower than that of China and India, 18 percent lower than Laos and 26.5 percent lower than Indonesia. Even with the latest increase, the prices would only be on par with China and India, he said.

"The fact that Vietnam's electricity prices are lower than other countries is also why foreign investors are not interested in investing in electricity projects here," he said.

Vietnam, one of Asia’s fastest-growing economies, has been struggling to develop its energy industry.

World Bank country director for Vietnam Ousmane Dione said at a recent forum that Vietnam would need to raise up to $150 billion by 2030 to develop its energy sector.

Dione added that electricity demand in the country is set to grow by about 8 percent a year for the next decade.