Retail electricity tariff set for rise in late March

The tariff adjustment has been calculated in conformity with realizing socio-economic development goals set by the National Assembly for 2019.

Accordingly, the average retail electricity 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, Vietnam Economics Times reported.

Hoang Quoc Vuong, Deputy Minister of Industry and Trade, said at a meeting on March 5 that the tariff adjustment has been calculated in conformity 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.

The ministry, in conjunction with the General Statistics Office of Vietnam, forecast that the tariff adjustment could potentially force the country’s GDP growth to fall by 0.22 per cent and the CPI to inch up 0.29 per cent.

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 Decision No. 281 regarding the costs of power generation during 2019. Most notably, 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 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.