Minister of Industry and Trade: Electricity prices will have 5 levels, level 1 from 0kWh to 100kWh

On the morning of August 21st, Minister of Industry and Trade Nguyen Hong Dien answered questions at the National Assembly Standing Committee regarding thematic supervision and questioning since the beginning of the 15th National Assembly term.

Representative Pham Van Hoa ( Dong Thap ) argued that the current retail electricity pricing structure, which includes a six-tiered system for household electricity consumption, is not in line with the actual consumption patterns of the people. For example, the consumption level for tier 1 (0-50kWh) is too low. "Does the Ministry of Industry and Trade have any solutions to revise the electricity pricing structure to make it more appropriate? Could they consider exempting the 10% VAT on electricity bills to support the people, especially poor households?" Representative Pham Van Hoa questioned.

Minister Nguyen Hong Dien stated that the tiered electricity pricing model is common and used in many countries because it encourages customers to use electricity economically. Unlike other industries, the more electricity is produced, the greater the risk to the environment; therefore, responsibility in environmental protection is needed because energy is a sector that emits a significant amount of pollutants. In Vietnam, according to Decision 28 of the Prime Minister , the retail electricity price consists of 6 tiers. However, this pricing system has revealed shortcomings, so the Ministry has been researching and revising it recently.

Minister of Industry and Trade Nguyen Hong Dien answers questions. Photo: QUANG PHUC

In accordance with the resolution of the Standing Committee of the National Assembly and incorporating the opinions of National Assembly deputies, the Government has directed the Ministry of Industry and Trade to take the lead in amending and supplementing Decision 28. Therefore, the Ministry of Industry and Trade has just submitted to the Government a draft decision amending Decision 28, in which the method of calculating electricity bills for households has been reduced to 5 tiers, instead of the current 6 tiers. The cheapest tier, for households using less than 100 kWh, is 0-100 kWh, instead of the current 0-50 kWh, to support the poor; while the highest tier (tier 5) is from 701 kWh onwards.

In addition to reducing the number of tariff tiers, this revision also redesigned the electricity prices for each tier to minimize the impact on electricity users. Prices for different customer groups (production, business, services, etc.) were also adjusted. This aims to gradually eliminate unreasonable disparities and cross-subsidization between different electricity users.

The Minister stated that Representative Hoa's proposal has been accepted and submitted to the Government. The goal is to maintain the level of state budget support for the poor and disadvantaged up to 30% of the electricity consumption limit. From 30% to the end of the first tier, consumers will still have to pay according to regulations.

Minister of Finance Ho Duc Phoc answers questions. Photo: QUANG PHUC

Responding to questions regarding the proposal to exempt 10% VAT on electricity bills, Minister of Finance Ho Duc Phoc stated that taxes are the main source of state budget revenue, and reducing taxes to address a sector with significant price fluctuations is unreasonable. He noted that the National Assembly has already reduced taxes for businesses and households (approximately 200,000 billion VND). Regarding tiered electricity pricing, regulations already exist to support poor households and families receiving social welfare benefits; tiered pricing is also applied to households that use electricity economically.

In response, National Assembly Deputy Pham Van Hoa (Dong Thap) stated that people are charged for electricity including VAT. Taxes are a source of state revenue, and while the public supports taxing electricity at a tiered price, the Deputy suggested that the Ministry of Industry and Trade and the Ministry of Finance study reducing the 10% VAT for electricity consumers.

Representative Huynh Thanh Phuong (Tay Ninh) stated that voters and many experts believe that the electricity pricing system has many shortcomings, and this is one of the important reasons for the losses incurred by the electricity sector in 2022 and 2023. What is the best solution for managing electricity prices in the future?

Delegate Huynh Thanh Phuong – Tay Ninh. Photo: QUANG PHUC

In response, Minister Nguyen Hong Dien emphasized that there is no truth to the claim that the Ministry of Industry and Trade's electricity pricing policy is causing the Vietnam Electricity Group (EVN) to incur losses. The Ministry of Industry and Trade is the state agency responsible for advising on electricity pricing policies, ensuring compliance with current laws, especially the Electricity Law and the Price Law. Electricity is a price-stabilized commodity; EVN must purchase it at market prices, but the output must be regulated by the state to stabilize prices and prevent inflation. Regarding mechanisms to prevent EVN from incurring losses, the upcoming amendments to the Electricity Law will contribute to addressing this issue.

Minister Nguyen Hong Dien also stated that the Government has just decided to transfer the National Power System Dispatch Center (A0) from EVN to the Ministry of Industry and Trade. This will ensure transparency and fairness in the dispatch and operation of the power system. At the same time, the Government has also just issued a decree on direct electricity trading for large electricity consumers; and will soon issue a decree on encouraging the use of rooftop solar power… these measures are gradually making the electricity market more perfect.

Representative Nguyen Hoang Bao Tran (Binh Duong) questioned that the current demand for solar power from households in the South is very high. However, the State currently lacks a policy to purchase surplus electricity from households to avoid wasting investment costs in solar power and to reduce consumption of the national power grid.

In response, Minister Nguyen Hong Dien informed that the Ministry of Industry and Trade is advising the Government to issue a decree on encouraging the development of rooftop solar power. Accordingly, to encourage the development of clean energy sources, the Ministry of Industry and Trade is researching pilot projects where surplus electricity not used can be sold to the national grid. In addition, it must comply with technical standards and legal regulations.

Scene from the questioning session. Photo: QUANG PHÚC

Representative Dương Văn Phước (Quảng Nam) questioned the solutions to address the issue of protection rackets in market management.

The Minister of Industry and Trade stated that in a market economy, trade fraud is a common occurrence. Recently, tens of thousands of violations have been processed, and tens of thousands of billions of dong related to trade fraud have been collected for the state budget. This also poses a significant challenge for regulatory agencies.

Regarding the issue of some market management officials engaging in protection rackets, the Minister affirmed that this does exist, due to the nature of the job where market management officials have the authority and responsibility to decide whether or not to impose penalties. Because of this nature, the Ministry of Industry and Trade regularly rotates officials to prevent violations. The Ministry will continue to advise on and supplement policies and mechanisms, especially regarding inspection and auditing, to handle officials who violate regulations. Dozens of officials have been disciplined and transferred to other positions in accordance with regulations.

PHAN THAO

Source: https://www.sggp.org.vn/bo-truong-bo-cong-thuong-gia-dien-se-con-5-bac-bac-1-tu-0kwh-den-100kwh-post755044.html