Power, fuel price hikes double whammy

The hikes in electricity and fuel prices on March 1 are causing distress to businesses and ordinary citizens. With prices going up all round as a result, practicsing thrift seems to be the only solution at the moment.

Nguyen Tuan Khai, chairman and general director of the International Dairy Products Company, said he had to consider everything very carefully to save costs “or else we may go bankrupt.”

The company is investing in new equipment to reduce power consumption, including solar-operated, since power is a major production input in the dairy industry.

“We already had to pay around 50 per cent higher prices of VND11,400 per litre to dairy farmers and now comes the new power price, but we cannot increase our prices accordingly,” he complained.

Confectioner Bibica’s production costs have risen by 10 per cent due to the electricity price hike, according to deputy general director Pham Van Thien. Cost cutting and improving productivity are the only options available to the company in this scenario.

Vu Thi Thuan, chairwoman of pharmaceutical company Traphaco, said her packaging and printing partners were asking for a 30 per cent hike in prices.

“We manufacture our products in modern factories meeting WHO standards, including environmental, and therefore we consume more power than normal,” she said, adding production costs would naturally increase.

Traphaco has called on its employees to practise thrift and carefully select suppliers to reduce costs. Thuan urged employees to share the difficulty by not asking for higher pay. But then workers too face hardships caused by the price hikes.

Supermarkets like Citimart, Maximark, Co.opMart, and Big C have already listed five to 15 per cent higher prices for a number of items. But they claimed that suppliers were demanding higher prices and they themselves have not yet factored in the higher power costs. More price increases may be around the corner yet.

Pascal Billaud, Big C Viet Nam general director, said his supermarket outlets used green technologies to reduce electricity consumption and cut costs.

As usual landlords are asking tenants, generally immigrant workers with low incomes, to pay higher than the official electricity tariffs and higher rents citing inflation.

Transport rates too are increasing. The railways, for example, plan to increase both cargo and passenger tariffs, which will, in turn, contribute to a fresh round of price increases.

Tags: Vietnam fuel prices