Power tariff restructure touted

The capital hungry power sector in Viet Nam needs to charge consumers more for power and rethink its pricing mechanisms to attract necessary investment.

The power sector needs an additional US$80 billion capital in the 2010-15 period, according to Viet Nam Energy Association at a conference on mobilising capital to develop the power sector in Ha Noi on Wednesday.

Dau Duc Khoi, deputy general director of Electricity of Viet Nam (EVN) said they needed to find an extra $40 billion for planned power projects worth $52 billion.

Participants to the conference agreed the sector should draw more investors at the same time as rethinking the way it billed consumers for power.

Tran Viet Ngai, chairman of the energy association said prices expected to edge up to eight cents per kWh from the current five cents to attract investors.

Khoi said that the government should use ODA funds and governmental funds to guarantee investors loans because “no business could afford to pay interest rates of 14 to 15 per cent a year to invest in power development projects.”

An Binh Commercial Bank and Bank for Development of Viet Nam said the current low prices and price mechanism discouraged investors.

The Government should do away with the staggered price chart that it uses now for power because it was not cost-effective to manage, Khoi said

Ngai said it was necessary, however, to have power rate mechanism according to market price and the Government should retain the subsidies for the poor, students and people with social policies for the first 50 kWh that each household uses.

The power price for both individuals and businesses was subsidised by the Government, said Do Huu Hao, deputy Minister of Industry and Trade. The power sector should pay the same price for coal as the rest of the market to make the coal industry more profitable, he said.

The coal sector needs $1.3-1.6 billion a year invested in exploiting coal for power production. Imported coal raises the cost of generation to $1.45 per kW.

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage