Minister of Industry and Trade explains why electricity prices have not...increased

From August 2013 until now, electricity price has not changed and will not increase in the future.

That was the affirmation of Minister of Industry and Trade Vu Huy Hoang answering the press on the sidelines of the National Assembly on the afternoon of October 30.

Regarding electricity price management, the commander of the industry and trade sector emphasized that adjusting electricity prices according to market mechanisms is a joint resolution of the National Assembly and the Government. However, electricity prices also depend on many input factors such as fuel and raw material costs, exchange rate fluctuations and the actual socio-economic situation.

Minister Vu Huy Hoang confirmed that retail electricity prices will be adjusted upward.

Therefore, although electricity prices are regulated by the market, we must take into account issues affecting people's lives, especially the poor and low-income people. Specifically, according to the Government's policy, each month poor and low-income households receive 30 kWh without paying.

“On the one hand, we must ensure that the electricity industry does not suffer too much loss in business, on the other hand, electricity prices remain close to the market and still ensure that the poor are not affected by the impact of exchange rates. We have recently implemented this policy very well. Therefore, despite fluctuations in input and output factors, and socio-economic fluctuations, for 1 year and 2 months (from August 2013 to present), electricity prices have not changed,” said Minister Hoang.

Thanks to the "restrained" electricity price, it has contributed to stabilizing inflation, keeping CPI low, and the lives of poor households and policy families not being affected by adjustments (if any).

It is estimated that by 2020 the electricity industry will need an additional 8,000 billion dollars to invest in its construction projects. Will a roadmap for increasing electricity prices be set to get some money to compensate for the investment?

Answering this question, the Minister of Industry and Trade said that according to the Government's roadmap for the development of the electricity sector, by 2015 we will bring electricity prices in line with the market. From 2016, electricity prices will increase and decrease according to the market.

From 2015 onwards, electricity prices will follow market signals, increasing and decreasing. If input factors decrease, the electricity industry will certainly decrease. If they increase, electricity prices will of course increase as well. However, even if electricity prices increase/decrease, there will still be support policies for the poor. Not only that, this support money still has a “little bit of surplus” because many households in mountainous areas, islands, etc. do not use the full allowed electricity capacity.

In particular, in island and border areas, the electricity industry serves politically. Bringing electricity to the islands is very expensive, but the current policy is still that the price on the islands is the same as on the mainland. That is the State's policy to support remote areas and the poor. As for households using electricity of 100 kWh or more, they are following the market price.

"Recently, the ministries (Ministry of Finance, Ministry of Industry and Trade, State Bank...) sat down together to calculate the issue of adjusting the supply and level of price adjustment. Recently, the consumer price index increased slowly, there was a lot of water in hydropower plants, so they mobilized hydropower sources to reduce electricity generation using high-priced DO and FO oil to lower prices.

The exchange rate difference “spring” is no longer compressed, so in terms of policy, electricity prices can be increased. However, in reality, electricity prices have not been adjusted up due to taking into account the social impact of price increases,” Minister Vu Huy Hoang affirmed once again.

According to Infonet