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Tuesday, June 25, 2024

Electricity tariff hike expected next year

The Saigon Times

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HCMC – Vietnamese authorities are currently weighing an electricity tariff hike as part of a major plan to cope with financial challenges in ensuring a stable power supply.

At a forum on 2024 electricity supply organized by the Vietnam Government Portal on November 7, key issues and potential solutions within the power sector were discussed, with a particular focus on the year 2024.

Bui Xuan Hoi, president of the Northern Power College, said there remain shortcomings in planning and execution across all phases of power generation, transmission and distribution.

Hoi pointed out that electricity pricing plays a significant part in dealing with challenges in the sector, with production costs accounting for 70-80% of the overall costs. While the cost of power generation is closely tied to market dynamics, transmission, distribution, and retail prices are regulated by the Government.

The gap between production costs and electricity prices has widened, with a modest 3% price increase over the past four years, failing to cover production expenses. This disparity has put pressure on industry players to operate their facilities as efficiently as possible, increasing the risk of power shortages due to inadequate maintenance.

The consequences of these challenges were evident during recent heatwaves, where water shortages at northern hydroelectric reservoirs and power plant issues led to localized power shortages, resulting in significant estimated economic losses of US$1.4 billion, according to the World Bank.

To address these concerns, the prime minister has instructed ministries and relevant agencies to review and potentially amend Decision 24/2017, which governs the mechanism for adjusting the average retail electricity price based on actual conditions.

Efforts are being made to expedite ongoing power source projects, enhance maintenance practices, improve forecasting and develop contingency plans to handle unforeseen fluctuations.

Stakeholders are also considering using renewable energy sources, such as rooftop solar power, to ensure a stable power supply. This includes resolving issues related to feed-in tariffs and purchasing rooftop solar power from households.

Efforts to address power supply concerns began in April 2021 when the prime minister emphasized the urgency of securing a stable electricity supply.

In 2022, the Government directed the completion of long-delayed projects such as the coal-fired Long Phu 1 thermal power plant, Song Hau 1 thermo-power station, and Thai Binh 2 thermal power plant, all of which have since become operational, bolstering the nation’s power generation capacity.

The latest directive from the Government is focused on the swift implementation of the 500-kV transmission line circuit 3 project, designed to alleviate stress on the existing 500kV lines. This project is scheduled for completion by June 2024, with the aim of ensuring a consistent electricity supply in the coming years.

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