Vietnam: EVN price setting proposal receives wide-scale challenge

Vietnam: EVN price setting proposal receives wide-scale challenge

The proposal of the Ministry of Industry and Trade (MoIT) to authorise
Electricity of Vietnam (EVN) to adjust electricity tariffs, with an annual
maximum ceiling of 20 per cent, has received objections from local
authorities and experts alike.

The MoIT has submitted the proposal to the prime minister the mechanism to
adjust the electricity selling price to replace the currently applicable
Decision No.69/2013/QD-TTg.

Accordingly, the MoIT suggested allowing EVN to make upward revisions to
power tariffs every three months by a range of 3-5 per cent in case there
are changes to the basic input parameters, without reporting to the MoIT.
Thus, the annual maximum rise would be capped at 20 per cent. For a higher
rise, EVN has to ask for the PM's approval.

Meanwhile, according to the current decision in effect, the minimum interval
between two electricity price hikes is six months, with a range of at least
7 per cent. EVN must secure the MoIT's approval to increase the selling
price of electricity by 7 to 10 per cent. To raise the tariff by more than
10 per cent, EVN has to make a dossier on the price plan, report to the
MoIT, which will send it to the Ministry of Finance for appraisal and the PM
for approval.

Responding to the draft decision, the Vietnam Chamber of Commerce and
Industry (VCCI), which represents the business community, told newswire
Vnexpress that an increase of 20 per cent is quite high, because since 1995
to date, the inflation rate has not once exceeded 20 per cent per year.
Thus, VCCI requested the PM to reconsider the proposal.

VCCI agrees with the minimum interval of three months between two
electricity price hikes, however, it proposed that EVN has to seek an
official MoIT approval accompanying every hike between 3-5 per cent. Above 5
per cent, EVN would have to seek the PM's approval.

Tran Dinh Long, deputy chairman of Vietnam Energy and Electricity
Association (VEEA), told Baodatviet that because the market is always
changing, the government should pick a reasonable frequency for the change
of electricity retail price and the maximum change allowable, and government
agencies, experts, and people have to decide on a reasonable electricity
retail price.

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Ref:
http://www.vir.com.vn/evn-price-setting-proposal-receives-wide-scale-challen
ge.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com