Draft proposal to establish an Electricity Price Stabilization Fund: Increasing the burden on the people.
The Ministry of Industry and Trade is seeking feedback on a draft proposal to establish an Electricity Price Stabilization Fund to mitigate the adverse impact of market factors on electricity prices.
However, expert analysis suggests that establishing this fund would be more "unstable" as consumers would have to increase their contributions.
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| The requirement for citizens to contribute money to the Electricity Price Stabilization Fund will increase the burden of taxes and fees. (Photo: Nhu Y) |
According to the draft regulations on the mechanism for adjusting the average retail electricity price developed by the Ministry of Industry and Trade, the Electricity Price Stabilization Fund will be established to stabilize electricity prices. The fund is formed from electricity selling prices and is included in the cost of electricity production and business. The fund is established when input factors that determine electricity selling prices fluctuate, causing the average electricity selling price to decrease, and when the cost of electricity production and business has not been fully accounted for in the selling price...
Immediately, this proposal received considerable opposition. Speaking with a reporter from Tien Phong newspaper, Dr. Vu Dinh Anh, an economic expert, stated that the proposal to establish an Electricity Price Stabilization Fund is completely inappropriate in the current situation.
Mr. Anh argued: Basically, if we evaluate its effectiveness, as with the Fuel Price Stabilization Fund in the past, it can be seen that the fund's effectiveness has not been as desired due to some shortcomings. Meanwhile, recent opinions from the Ministry of Industry and Trade and the Ministry of Finance also suggest that this fund could be abolished. "With the draft proposal to establish an Electricity Price Stabilization Fund, careful calculations are needed to determine whether it is feasible," Mr. Anh said.
Another point to note is that, according to Dr. Vu Dinh Anh, the Ministry of Industry and Trade's proposal to establish an Electricity Price Stabilization Fund in the draft does not take into account the fluctuations in electricity prices. For example, with gasoline and oil prices, which are linked to international prices, the fund can be considered a buffer to mitigate the impact of price increases. But this is not the case with electricity.
Another concern for the public is how the price stabilization fund will be managed. Even with good management, this fund would require a separate mechanism with its own staff. This would mean unnecessary management costs, not to mention the issue of transparency in management.
"There are already too many off-budget financial funds in existence with numerous management shortcomings. Is it really necessary to create another fund?" Mr. Ánh questioned.
Unclear mechanisms, increased burden.
According to Dr. Le Dang Doanh, former Director of the Central Institute for Economic Management Research, the draft by the Ministry of Industry and Trade states that the Electricity Price Stabilization Fund is deducted from the electricity selling price and included in the cost of electricity production and business. With this regulation, if it doesn't clarify what percentage of the electricity price should be deducted, when the fund can be mobilized to compensate for losses, when the deductions should stop, and what the initial assessment of the fund's effectiveness is, then the establishment and management of the fund will lack transparency. More specifically, Dr. Doanh analyzed: The draft lacks calculations showing whether establishing the fund helps EVN reduce losses, whether any other country in the world has established such a fund, and what the successful or unsuccessful experiences have been.
Associate Professor Dr. Ngo Tri Long, former Deputy Director of the Institute for Price Research, believes that the formation of a price stabilization fund is necessary for businesses facing significant price risks. However, he argues that "the fund's funding must come from both sides, businesses and consumers. Consumers cannot be forced to pay in advance like with the fuel price stabilization fund. Since it's a risk mitigation measure in business, businesses must also allocate funds from their profits. Furthermore, the mechanism for forming the price stabilization fund must be transparent: where the fund's funding comes from, and how it will be used and managed effectively," Dr. Long stated.
According to an expert in the electricity industry, essentially, the people themselves should contribute to the price stabilization fund, as the fund is deducted from the electricity selling price. The formation of the fund basically only serves to reduce losses for EVN, while the fund already covers those losses, thus increasing the burden on the people. Even under the price adjustment mechanism, EVN only reduces the average electricity price when input costs decrease and the fund is already in place. Therefore, the timing of establishing the fund needs careful consideration.
According to VOV
