Electricity prices floated on market base from Jul 1

The competitive electricity market will be run in two phases: trial and official operation.

In which, the pilot operation phase will start from July 1, 2011 and the latter will be conducted from 2012 to the end of 2014, the VnExpress reported on May 18, citing the announcement of Ministry of Industry and Trade.

For the first phase, the electricity sector will spend first 2 months to pilot virtual market where will run according to the market regime under book entry. Following 4-5 months will be spent on overall pilot according to input costs.

The average electricity price currently is 5.9 cent per kWh lower than the real cost so that the government has to offset losses, which hampered investors’ interest in electricity generation.

So, when the electricity price is floated on market base, four basic stages such as generation, transmission, surcharge and distribution will be separated. In line with the method of progressive electricity price at this time, first 50 kWh is supported with an amount of equaling to 30,000 dong per month applied on poor households.

Talking to the press meeting on May 18, Chairman of Electricity of Vietnam (EVN), Dao Van Hung said that the firm would pilot the competitive prices within June in the sector only. And then the trial will be launched in three regions: North, Central and South.

According to the competitive electricity market roadmap as approved by the government, the gap between two price adjustments is maximum 3 months. Monthly EVN will give a watchdog on the change in input costs to build electricity selling price.

When the basic price decreases 5 percent against current prices, EVN is allowed to adjust a respective reduction and then report to joint ministries of finance, industry and trade. And vice versa, if input costs surge 5 percent, EVN can propose a respective increase. – Vietbiz24

Posted by VBN on May 19 2011. Filed under Energy. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry