Vietnam electricity prices to rise by 8.36 pct this month

While a ministry spokesman did not specify the date of increase, he said the plan has been approved by the Prime Minister.

As such, average electricity prices will go up from VND1,720 (7.4 U.S. cents) to VND1,864 (8 cents) per kWh exclusive of VAT, equivalent to a unit increase of 0.6 cents.

According to Vietnam Electricity (EVN), 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 has said.

Deputy Minister of Industry and Trade Hoang Quoc Vuong said 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," Vuong said, adding that while consumption is expected to rise by 10 percent this year, electricity projects by private investors have seen slow progress, not generating enough power to meet demand.

The power price increase could raise the consumer price index (CPI) by 0.26 - 0.31 percent, the ministry estimates. Vietnam's CPI increased by 3.54 percent in 2018.

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 will need to raise up to $150 billion by 2030 to develop its energy sector.

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