“Raising electricity prices doesn’t solve development issues”

With energy fees expected to rise in order to encourage investment, one official shares why he says it isn’t the answer.

Pham Manh Thang, Director of the Electricity Regulatory Authority of Vietnam under the Ministry of Industry & Trade, shared his point of view regarding this proposal with the media.

He felt that electricity fees needs to be amended in order to ensure energy providers make profits but not to invest in developing the electricity industry.

The Vietnam Energy Association (VEA) said the current price of VND950 ($0.05) was too low to attract investors to the electricity industry. The business group asked the Government to approve raising electricity prices to VND1,500 ($0.08) per kilowatt-hour from the current VND950 for all middle and upper-income consumers while keeping it at VND600 ($0.03) for the first 50kWh for the subsidised categories of consumers.

Thang said that according to current electricity laws and regulations of the government, only the Ministry of Industry & Trade is responsible for proposing amendment of electricity fees.

“Opinions or recommendations of the business group are made to protect interests of their members only, not of the people. If their proposal was made for the sake of consumers, they would recommend decreasing the electricity prices,” added Thang.

He felt that with the current investment speed in the electricity industry, there is no raise in fees which can meet the development demand of the industry. An ideal raise should ensure the benefit of not only consumers but also investors and energy providers. Developing the electricity industry needs loan capital, not higher fees.

The Electricity Regulatory Authority is setting electricity prices according to the same policy used to price petrol.

Thang says electricity fees should be amended because under a market regime all kinds of expenditure related to producing electricity are changed by hours and by days. Thus, selling prices need to be changed to enable the return of investment and profits of the energy providers. However, electricity transmission and distribution prices should be amended once a year or less depending on circumstances and the government’s management.

Tags: Vietnam electricity prices, Vietnam energy