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Electricity price rise to hamper manufacturing operations: experts

VOV.VN - They have criticized an upcoming surge in the average retail electricity tariff for hindering enterprises from restraining production costs.

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electricity price rise to hamper manufacturing operations: experts hinh 0
Average retail electricity tariff is projected to up 8.36 per cent in late March.

A large number of enterprises have raised concern that an 8.36-per cent surge projected for the average retail electricity tariff in late March would definitely make their production costs swell up amidst their non-stop efforts to cut down costs and improve competitiveness.

Ngo Anh Truong, the manager of a tempered glass door manufacturing company in Hanoi, said the price hike would pose difficulties for enterprises, especially those operating in the fields of industrial production and manufacturing.

Truong said producers must increase selling prices in return for the increasing input costs caused by the power price rise. This would also push up the price of services, he noted.

Economic expert Ngo Tri Long said that the power price hike have previously been forecast to make the consumer price index (CPI) and the producer price index (PPI) edge up 0.26-0.31 per cent and 0.15-0.19 per cent, respectively. However, it could lead to a drop of 0.22-0.25 per cent in the GDP growth rate.

A noteworthy thing is that the estimated figures have yet to be assessed by any independent review entity, thus making them unconvincing, Long claimed.

The expert said the power price hike will hit sectors with high power consumption. He therefore urged for the need to scrutinize the impacts which the price surge could have on some key industries like steelmaking, plastics and cement production.

He also underlined the significance of assessing how the power tariff rise influences the input costs of enterprises operating in such fields.

Meanwhile, economic expert Le Dang Doanh said the tariff hike absolutely pushes up cost prices, thus threatening local enterprises’ competitiveness against rivals in the Southeast Asian region and those from member countries of the Comprehensive and Progressive Agreement for Trans - Pacific Partnership (CPTPP).

This in turn forces local firms to enhance the application of cutting-edge yet electricity-saving technical measures with the hope to slash product costs.

Even, many could shift their main production from daytime to nighttime to enjoy lower electricity tariff ranges, Doanh further said, stressing this, of course, lags their productivity and operations.

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The power sector should increase retail power tariffs only after it consults opinions from business circles. The price amendment should incline towards supporting enterprises, instead of making adverse impacts on their operations amid stiff competition with rivals.

Earlier, the Ministry of Industry and Trade on March 5 announced a plan on rising the average retail electricity tariff by 8.36 per cent in late March.

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The average tariff could be increased to VND1,864 (8.12 US cents) per kWh, as opposed to the current rate of VND1,720 (7.49 US cents) per kWh.

According to Hoang Quoc Vuong, Deputy Minister of Industry and Trade, the price surge has been calculated in accordance with the implementation of socio-economic development goals set by the National Assembly for 2019.

The adjustment could also be seen as a positive way of building up the financial health of the power sector. The tariff rise was advocated by the Government in a bid to both keep consumer price index (CPI) growth within an acceptable limit and cause no adverse impacts or unexpected changes to the economy.

Vietnam has made similar changes to electricity tariffs in the past, seven times in total since 2010. The last adjustment was made on December 1 2017 with a 7.5 per cent rise.

Last month, the ministry issued the costs of power generation during 2019. Accordingly, the reference prices for electricity generation in coal-fired power plants now range between VND1,677.02 and VND1,896.05 per kWh, not including some tax obligations and costs.

These tariffs will be used to negotiate power purchase agreements (PPA) between the State-run group Vietnam Electricity and other power generation entities.

The ceiling generation price for thermal power plants fueled by imported coal and designed with a net capacity of 1x600 MW is set at VND1,896.05 per kWh. Whilst the rate for standard coal-fired power plants with a net capacity of 2x600 MW stands at VND1,677.02 per kWh.

VOV

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