Friday,  Jun 22, 2018,21:53 (GMT+7) 0 0
Power punch
Son Nguyen
Friday,  Dec 8, 2017,22:47 (GMT+7)

Power punch

Son Nguyen

When the Ministry of Industry and Trade convened an ad-hoc press conference last Thursday to explain the power price hike, not only journalists attending the event but also the public were stunned. It is not the increase - the average power tariff rising 6.08% to VND1,720.65 per kWh exclusive of tax – but rather the abrupt price change being announced on such short notice that wildly frustrates electricity users.

The ministry last Wednesday announced the power price hike that took effect on the following day. State utility Vietnam Electricity Group (EVN) had mulled ways before launching the power punch, sending an unprepared public to the corner as electricity users have no other options than to take the hit.

As covered by local media, few have decried the price hike but have shown disappointment at the way the power price change has been deliberated by EVN as well as the Ministry of Industry and Trade. In explanations at the press conference, the ministry said the change has been considered by all relevant agencies so as not to create any strong adverse impacts on the people’s livelihood and business.

Nguyen Anh Tuan, head of the Electricity Regulatory Authority of Vietnam under the ministry, stated that the price hike would spur December’s consumer price index by 0.08% and next year’s CPI by 0.1%, which is trivial as inflation this year has been tamed at less than 4% as endorsed by the National Assembly, according to Thoi Bao Tai Chinh newspaper.

For most households, the higher power tariffs will also leave little impact. Tuan is quoted as saying in Tien Phong newspaper that “those households using up to 100kWh a month will pay an additional VND6,600… while those using 400kWh a month will pay an additional VND34,800.”

Similarly, enterprises will see their input costs rising by only 0.07% due to the power price hike, according to Thoi Bao Ngan Hang.

Tuan of the ministry said that the power price hike is inevitable as input costs at EVN have increased, which have been inspected by multiple agencies including the National Assembly Economic Committee, the Vietnam Chamber of Commerce and Industry, and even the Vietnam Standards and Consumer Protection Association.

The power price hike, however, is understandable, as EVN has kept the prices unchanged for nearly three years despite rising input costs, according to experts.

Le Dang Doanh, an economist, says in Nguoi Lao Dong newspaper that the power sector has managed to contain the power price for over two years, exerting great pressure on its investment activities. Therefore, raising the power tariffs is unavoidable.

Similarly, Nguyen Minh Duc of VCCI comments that the power price hikes have lagged behind the inflation in the past few years.

But, as stated early on, many experts have likened the price hike as an ambush on consumers.

Nguyen Manh Hung, general secretary of the Vietnam Standard and Consumer Protection Association, said his agency was only invited to inspect input costs at EVN, but not consulted when it comes to the power price hike. “This is the seller-buyer relationship. The buyer should have the right to negotiate with the seller over the price, rather than the price being imposed upon them by the seller,” Hung is quoted in Thoi Bao Tai Chinh.  

Nguyen Minh Duc of VCCI, who also joined the input cost inspection at EVN, says in Thanh Nien newspaper that the power price hike plan has remained confidential despite prevailing regulations on power price transparency. The price increase all rests with the seller’s decision, without the buyer’s opinion, says Duc.
Nguyen Duc Thanh, director of the Vietnam Institute for Economic and Policy Research (VEPR), bluntly says in Nguoi Lao Dong that “we are taken hostage by EVN. They ask for a price hike, and we have to accept it.” Thanh opines that the power price hike is based on calculations by the monopoly without any transparency.

Similarly, Nguyen Minh Phong, an economist, also decries the absence of transparency in the power pricing scheme. He says in the news site VOV.vn that the power sector needs to provide all relevant information so that the public could understand the rationale behind the price hike.

More importantly, both EVN and the Ministry of Industry and Trade made the decision abruptly, making life tough for electricity users, especially enterprises.

Tuoi Tre Online, citing experts, says that there should be a roadmap for power pricing so that enterprises can actively conduct business.

“The power price hike should have followed a specific roadmap, instead of ‘announcing the hike today with effect tomorrow’ that causes difficulties for enterprises, since they have to make business plans on a quarterly or annual basis,” the online paper quotes Nguyen Minh Due of the Vietnam Energy Association.

Nguyen Van Tuan, chair of the Vietnam Cotton and Spinning Association, echoes the point, saying enterprises will suffer damage due to the sudden price hike. “The price hike of 6.08%, in my opinion, is acceptable. However, enterprises can cope with the problem only if they are informed of the price hike long beforehand,” he is quoted in the paper.

In the news site zing.vn, Le Dang Doanh says that mechanisms regarding the power sector need to be reformed so that buyers can have their opinions upon any plan of price hike. The power market needs to be restructured so that all stakeholders can supervise each other, he asserts.

In a market economy, the genuine seller-buyer relationship must be safeguarded to ensure benefits for all sides, and to prevent a power punch from a monopolistic player.

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