Electricity of Viet Nam (EVN) should not be allowed to increase electricity rates more than once per quarter due to the negative impacts on the economy, said Minister of Finance Vuong Dinh Hue.
Hue has sent a document to Minister of Industry and Trade Vu Huy Hoang responding to Hoang’s proposals on taxes, fees and prices for a number of commodities, including electricity.
In the document, Hue agreed in principle that electricity rates needed to increase to reflect actual costs, but the rate and timing of increases needed to depend on the economic situation. In the current economic situation, he said, EVN needed to co-ordinate with the ministries to establish a general plan for increasing electricity rates based on input costs, such as coal prices.
The plan should consider specific economic impacts on major industries from increase in electrical rates, Hue said.
EVN most recently sought Government approval to raise rates on September 8. The utility giant said it had suffered losses of VND2 trillion (US$96 million) this year, and cumulative losses over the last several years were preventing EVN from investing in new capacity – a situation that would lead to expected power shortages during 2013-15, said EVN deputy director Duong Quang Thanh.
It would need to invest another VND525 trillion ($25 billion) by 2015 to meet demand, but current estimates are that it would only be able to raise about half that amount, Thanh said.
Hue said EVN should report on the situation to relevant authorities, including the State Bank of Viet Nam, which could arrange special financing mechanisms.
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