Electricity price increase: People worry about pressure, businesses fear 'charging' fees

Pressure to increase a series of costs

According to Vietnam Electricity Group (EVN), from May 10, average retail electricity price by 4.8%, raising the average electricity price to more than VND2,200/kWh. This is the second adjustment since 2023, bringing the total increase over the past three years to more than 17%.

Share with PV Tien Phong , Mr. Tran Van Linh - Chairman of the Board of Directors of Thuan Phuoc Seafood and Trading Joint Stock Company - said, the characteristics of seafood processing industry is to use a lot of electricity, especially to continuously maintain cold storage. Currently, each month, businesses have to pay an average of about 1.5-2 billion VND for electricity, depending on production output and actual electricity consumption.

According to Mr. Linh, the significant increase in retail electricity prices for businesses from May 10, according to preliminary calculations by this business, could cause businesses to incur an additional hundred million in electricity bills each month.

The increase in electricity prices will cause many export businesses to incur a series of additional costs.

“In the context of businesses being under pressure from the export market and the US tariff policy, this is like a blow that makes it difficult for businesses to operate in production and business. The most obvious immediate impact is the increase in production costs, pushing up the cost of products of businesses, causing businesses to decrease in profits. In the long term, this will affect the competitiveness of businesses, especially when the export market is very difficult,” said Mr. Linh.

Mr. Nguyen Xuan Nhu - Director of a mechanical enterprise in Dien Chau, Nghe An - said that electricity costs account for about 10-15% of product costs. Businesses in the mechanical industry are almost all very sensitive to rising electricity prices because they will affect product costs. In particular, the most worrying thing is the spillover effect when it will drag down the costs of many other input factors such as raw materials, logistics, operations, etc.

“With the current profit margin of the mechanical industry being quite thin, only about 5-10%, the level increase electricity price “This could cause many businesses to lose money if they do not restructure their operations. At the same time, workers will face pressure when living costs increase, forcing businesses to consider adjusting wages and other issues,” Mr. Nhu shared.

Ms. Nguyen Thu Huong (Nam Tu Liem, Hanoi) shared that her family of 4 had electricity bills of around 600,000 - 700,000 VND before. With a 4.8% increase, it may not seem like much, but combined with the continuously increasing rent and water bills, fixed costs will increase, putting pressure on family life.

"It is worth mentioning that every time the hot season comes, the demand for electricity increases, so the electricity price is adjusted, leading to a sharp increase in electricity bills. In the past two months alone, the electricity bill has increased by 1.2 - 1.3 million VND, forcing the family to cut down on other expenses such as eating out or shopping," said Ms. Huong.

Need to increase price convincingly

Mr. Vo Quang Lam - Deputy General Director of EVN Group - explained that the price increase 4.8% is based on the results of regular reviews and on the basis of the Electricity Law and Decree 72 on Adjusting electricity prices. Along with that, the cost of producing and purchasing electricity is currently increasing, especially when the proportion of cheap electricity sources such as hydropower has decreased significantly due to weather effects.

However, in the context of EVN's financial situation in 2024 not being clearly disclosed, the continued increase in electricity prices has caused public opinion to question the operational efficiency of this enterprise, especially the level of control of costs related to operations in the structure of the enterprise's total increased costs.

Experts say that along with increasing electricity prices, EVN needs to be transparent about input costs.

The audit results of the Ministry of Industry and Trade show that EVN's total electricity production cost in 2023 is more than VND 528,600 billion, equivalent to a cost of about VND 2,088.9/kWh. It is known that EVN still has tens of thousands of billions of VND in accumulated losses from previous years, along with more than VND 18,000 billion in unresolved exchange rate differences.

Talk to PV Tien Phong , Associate Professor, Dr. Nguyen Minh Due - expert of the Energy Association - said that the adjustment of electricity prices currently depends on the average cost of the system, which involves a series of costs such as generation, transmission, distribution, etc., so it is very complicated and requires transparency and fairness.

Currently, the cost of electricity production for each type of electricity and each stage of operation in Vietnam is still unclear, so every time EVN adjusts electricity prices, it will cause public concern.

“Although increasing electricity prices is necessary in the context that electricity prices in Vietnam are still lower than in other countries, the cost ratio to increase the new electricity price must also be clearly stated. EVN needs to make this information transparent so that people and businesses can monitor and make the electricity price increase more convincing,” said Mr. Due, adding that the electricity industry needs to apply it soon. two-component electricity price when this problem has been very difficult for some time.

Mr. Nguyen Tien Thoa - former Director of the Price Management Department - said that the increase in electricity prices will not only have a direct impact but also an indirect impact through increased prices of goods, with the possibility of a spillover effect on CPI of up to 0.34%, so strict management by relevant agencies is needed.

“Increasing electricity prices needs to be accompanied by a transparent roadmap, deep reforms in the competitive electricity market, and an effective financial control mechanism for EVN. Otherwise, people and businesses will continue to bear the costs without seeing a clear commitment from the supplier,” said Mr. Thoa.

Source: https://baoquangninh.vn/tang-gia-dien-nguoi-dan-lo-ap-luc-doanh-nghiep-so-du-phi-3357558.html