The burden of rising electricity prices

From October 11, 2024, Vietnam Electricity Group (EVN) adjusted the average retail electricity price, increasing it by 4.8%. This creates additional pressure on people's living costs and the production and business activities of enterprises.

Impact on the economy

Ms. Le Thu Tra (residing in Thanh Loc ward, District 12, Ho Chi Minh City) expressed her concern: “I’ve been working for a long time and am about to retire. My family has two children studying at university. Currently, food prices are soaring, tuition fees for my children are also starting to increase, and now electricity prices are rising as well. Everything is increasing a little, and the cumulative cost over the month is quite stressful. The increase in electricity prices could easily lead people to think that the electricity sector is operating at a loss and forcing the people to bear the burden.”

Agreeing with Ms. Thu Tra's opinion, Mr. Nguyen Tu (an office worker residing in Tam Phu ward, Thu Duc City) believes that the 4.8% increase in electricity prices may sound small, but it actually impacts the entire economy because everything increases. He argues that the decision to raise electricity prices at this time is unreasonable, especially since many people in affected areas are struggling to recover from the damage caused by Typhoon No. 3.

Production activities at Tinh Loi Garment Co., Ltd., Lai Vu Industrial Park, Kim Thanh District, Hai Duong Province. Photo: QUANG PHUC

Manufacturing businesses are equally concerned. Toan Phat Irradiation Co., Ltd., located in Phu An Thanh Industrial Park (Ben Luc district, Long An province), irradiates dragon fruit and seafood before export, an operation that consumes a lot of electricity.

Mr. Vu Thuong Hien, the company's production director, said that the increase in electricity prices will significantly impact the company's production costs. Just considering the electricity bill alone after the price increase, the company will have to pay nearly 10 million VND more per month. At a time when orders have not yet recovered and the market is facing many difficulties, the electricity price increase forces businesses to calculate additional costs to compensate.

"Businesses cannot arbitrarily increase selling prices for fear of losing customers. Reducing costs and optimizing production processes is necessary, but it cannot be done immediately at will," Mr. Hien said.

Similarly, Mr. Bach Hong Long, Deputy General Director of May 10 Corporation, said that the company will have to pay nearly 15 million VND more each month. Typically, when electricity prices increase, many other things also increase in price.

Rooftop voltage is weather-dependent.

The Vietnam Textile and Garment Association acknowledges that the increase in electricity prices at the end of the year poses a significant challenge and difficulty for businesses due to intense market competition, a shortage of orders, and a recent recovery in the market.

To adapt to rising production costs, including electricity prices, the textile and garment industry has implemented solutions to achieve its development goals, including investing in rooftop solar power. Currently, some businesses such as Viet Tien Garment and May 10 have invested in rooftop solar power to alleviate difficulties related to electricity costs in production. However, rooftop solar power cannot replace the national grid in industrial production due to its dependence on weather conditions.

A dispatching shift at Ho Chi Minh City Power Corporation.

Analyzing EVN's recent electricity price increase, Mr. Ngo Duc Lam, former Deputy Director of the Institute of Energy, said: Accelerating new power generation projects is the fundamental solution for the electricity sector, instead of using electricity price increases to address EVN's losses.

Furthermore, electricity prices need to be stable to minimize adverse impacts on macroeconomic stability and social welfare. Because electricity is different from other products like gasoline, which are immediately affected by world prices, prices must be adjusted promptly.

According to economist Ngo Tri Long, former Deputy Director of the Institute for Market and Price Research (Ministry of Finance), the impact of electricity price increases is immediately apparent in the electricity-intensive industrial sector. An independent agency is needed to assess and control EVN's input costs to ensure that electricity price increase decisions are transparent, open, and balance the interests of all parties, especially electricity consumers.

An economic expert further analyzed that, with the economy growing at around 7% annually over the past period, the demand for electricity is enormous. To ensure a stable energy supply for the economy, the electricity sector must promptly implement power planning, urgently connect renewable energy projects to the grid, and fully pay for electricity purchased from them in the past, in order to avoid waste and increase supply in a timely manner.

According to EVN's calculations, there are currently about 547,000 business customers, and with the electricity price increase, each household will have to pay an average of an additional 247,000 VND per month. For 1.921 million production households, the average cost per household will be an additional 499,000 VND per month…

DUC TRUNG

Source: https://www.sggp.org.vn/ganh-nang-gia-dien-tang-post763663.html