Power prices to be market-regulated after 2012

Prices of electricity will be based on market rates and not on state subsidy anymore starting 2012, the finance ministry said, adding that subsidies for petrol and oil prices will be further cut down this year.

This recent release to local media occurred in the context of a 15% hike in power rates applicable this month.

In addition, the price of petrol increased by over 17 percent and that of oil soared by 24 percent since February 24, but such rates are just equal to 45 and 57 percent respectively of the rates they should be if government subsidies were totally removed, the ministry said.

Specifically, the petrol price has been raised by 2,900 dong per liter, but the increase would have been 6,500 dong per liter if the government had not given subsidies to the petrol sector, the ministry explained on March 1.

In the other words, the increase in petrol prices just reflected a 50 percent cut in subsidies for this commodity.

As for electricity, the increase of 15.28 percent in its prices from March 1 meant the government subsidy for power has been reduced by 24.7 percent, said the ministry.

The ministry added that power prices will be adjusted to reflect a market mechanism after 2012. – Tuoitre

Tags: Vietnam electricity, Vietnam electricity market, Vietnam energy