2-8-2023 (HANOI) Vietnam’s state-owned utility, EVN (Electricity of Vietnam), has reportedly proposed to the government to implement another retail electricity price increase, just three months after the first hike in May. This move comes as EVN faces significant financial losses, with local media reporting an anticipated deficit of over 51 trillion Vietnamese dong (approximately 2.1 billion U.S. dollars) for this year.
In May, the average electricity retail price was raised by 3 percent, reaching 1,920 Vietnamese dong (about 0.08 dollars) per kWh. This increase allowed EVN to generate an additional revenue of 8 trillion dong. However, despite this adjustment, it was insufficient to offset the rise in electricity production costs, which spiked by 9.27 percent in 2022.
A recent report from EVN revealed a staggering loss of 36.3 trillion dong in electricity production during the first five months of this year alone. Without further adjustments to the electricity retail prices, EVN expects a potential loss exceeding 51 trillion dong this year, amounting to nearly 78 trillion for the period spanning 2022 to 2023.
Projections indicate that EVN could face cash flow shortages from July to December 2023. To manage this situation, the company has already resorted to borrowing funds from power generation units to secure necessary resources such as coal, oil, and gas for electricity production.
Experts have called for prudence in raising electricity prices, emphasizing the need for transparency concerning EVN’s electricity production costs. The decision to adjust electricity prices in Vietnam depends on the percentage of the increase. Adjustments ranging from 3 to below 5 percent fall under EVN’s purview, while increases between 5 to below 10 percent are determined by the Ministry of Industry and Trade. Any adjustment of 10 percent or higher requires approval from the prime minister.
