Will electricity prices increase further?

Answering this question, Mr. Vo Quang Lam - Deputy General Director of Vietnam Electricity Group (EVN) said that through the report of the inter-sectoral working group established by the Ministry of Industry and Trade (with the participation of the Ministry of Finance , the Government, the National Assembly Economic Committee, the Ministry of Labor - Invalids and Social Affairs, VCCI, Vietnam Electricity Association, Vietnam Consumer Protection Association) examining the production cost price in 2022, the group's loss in 2022 was more than 26,000 billion VND. In early 2022, the group also predicted that it would be a difficult year in balancing finances. The group's largest cost is purchasing electricity, accounting for 82% of the electricity cost. 2022 is also a year of sudden increase in input materials. Specifically, in 2020, buying a ton of coal cost about 60 USD, in 2021 it increased to 137 USD (more than 2 times higher than in 2020). By 2022, the average cost of a ton of coal will increase to 384 USD. Thus, compared to 2020, it will increase more than 6 times, compared to 2021, it will increase about 3 times.

Giá điện còn tăng nữa không? - Ảnh 1. — Many readers sent questions related to increasing electricity prices to the discussion.

Forecasting such a sudden increase in fuel prices, the group has proposed a series of solutions to reduce financial difficulties and imbalances. For example, units in the industry have reduced regular costs by less than 10% per year compared to regulations; delayed construction investment projects, power grid projects... by 30% to reduce input costs. At the same time, improve the efficiency of other production and business activities, thoroughly bid online, and purchase at the lowest cost through competitive bidding. In addition, 2022 also has the basic advantage of being the best hydrological year in history. Hydropower alone has exploited more than 14 billion kWh compared to the original plan issued by the Ministry of Industry and Trade . Thanks to the above solutions, the financial imbalance has decreased to 26,000 billion VND.

Why doesn't the electricity industry wait until the rainy season, use less electricity and then increase prices?

Regarding the above question, Mr. Lam analyzed: On March 4, 2023, the price was adjusted by 3%. With the forecasted revenue this year, it is expected to increase by 8,000 billion VND compared to last year's imbalance of 26,000 billion VND. So there is still 18,000 billion VND hanging there. Due to lack of resources, the difference due to exchange rates in recent years has not been paid to project investors.

In the first 4 months of 2023, raw material prices have decreased slightly, such as imported coal from Indonesia at 87% compared to last year. It is forecasted that there will continue to be difficulties in 2023, so the electricity industry will continue to closely monitor the development of input material prices, mobilize electricity sources more reasonably, and reduce input electricity purchase costs. Continue to reduce costs by 10%, continue to review projects that are not really urgent, then extend more, not only 30% but possibly up to 50% of the repair of power projects to reduce electricity purchase costs. At the same time, implementing a series of measures to increase electricity cost savings, investment in construction is also a solution.

Mr. Vo Quang Lam added that, according to Decision 24 of the Prime Minister , the group regularly reviews input costs every quarter and reports to the Ministry of Industry and Trade and the State Capital Management Committee to grasp information about the group's production and business activities. According to Decision 24, electricity price adjustments can only be made once every 6 months and must be approved by competent authorities. The increase in electricity prices is based on costs that are reviewed and controlled by competent authorities.

"We are aware that the difficulties of the group are also the common difficulties of businesses and people. Therefore, any change must harmonize the interests of the group, people and businesses. Therefore, the group operates in the most optimal and effective way to have electricity for daily life and production at the most reasonable price," said Mr. Vo Quang Lam.

Basically, the question of whether electricity prices will increase further remains open because EVN's losses are still hanging in the balance.

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