Reporter: Ministry of Industry and Trade (MOIT) had information about the expected adjustment of electricity price at 8.36% in March 2019. Could you tell us more about this information, sir?
Mr. Nguyen Anh Tuan - Director of Electricity Regulatory Authority of Vietnam (MOIT) - Photo credit: EVNEIC
Mr. Nguyen Anh Tuan: The adjustment of average electricity retail price over the years in general and electricity price in 2019 in particular has been implemented in accordance with Decision No. 24/2017/ QD-TTg dated 30th June 2017 by the Prime Minister on the mechanism of adjusting the average electricity retail price, ensuring the principle that electricity prices are adjusted in connection with the market mechanism under the State’s regulation in line with the conditions of socio-economic development of our country, and people’s income in each period.
With the results of inspection of EVN’s production and business electricity prices in 2017 and MOIT’s promulgated plan for power supply and power system operation in 2019, MOIT has instructed EVN to develop plans for electricity prices in 2019 based on the input indexes to calculate the electricity price and allocate the exchange rate differences suspended under Decision No. 24/2017/QD-TTg.
Accordingly, the electricity price plans were reviewed by the MOIT and the Ministry of Finance (MOF) and reported it to the Steering committee for Price regulation and Standing committee of Government.
The MOIT has collaborated with the General Statistics Office (Ministry of Planning and Investment) to evaluate the impacts of electricity price adjustment on consumer price indexes (CPI), producer price indexes (PPI) and growth rate of gross domestic product (GDP).
Reporter: What are the basis for adjusting electricity prices at 8.36% this time, sir?
Mr. Nguyen Anh Tuan: The plan for electricity price in 2019 has been developed based on the input parameters to calculate the electricity prices and allocate the exchange rate differences suspended under Decision No. 24/2017/QD- TTg, specifically as follows:
The structure of mobilized power source in 2019, on the basis of forecasting the growth rate of GDP in 2019, is about 6.8%, the MOIT has forecasted that the total commercial electricity output of the entire country in 2019 will reach 211.9 billion kWh and issued Decision No. 4677/QD-BCT dated 18th December 2018 on the plan of power supply and power system operation in 2019, proposed structures of hydropower plants, coal-fired thermal power plants, gas and thermal oil turbines, solar, wind and biomass power plants.
In the option of calculating electricity prices, the MOIT instructed EVN to update the status of meteorology, water levels of hydropower reservoirs and the progress of power plants in the actual status until the end of January 2019.
Input factors of electricity prices in 2019 plan for 2019 electricity price included input costs which impact on electricity price, specifically:
Prices of domestic coal; prices of coal mixed by imported and domestic coal of some power plants; According to the World Bank’s forecast on process of imported coal supplied to power plants, the world’s coal price in 2019 decreased by 7.41% compared to that of 2018.
Forecast on the process of gas supplied to power plants according to the World Bank’s forecast and gas price adjustment for some power plants, so that all the gas turbine plants will buy gas at the market prices.
The environmental protection tax imposed on coal and oil has increased since 1st January 2019 under Resolution No. 579/2018/UBTVQH14 dated 26th September, 2018 by the Standing Committee of the National Assembly.
Forecast of 2019 exchange rate between VND and other foreign currencies such as USD, Euro, Japanese Yen, etc., based on the actual data in year 2018 and forecast of exchange rate in year 2019.
The suspended expenses have not been included in the electricity prices of the previous years (exchange rate difference). The level of allocation will be considered on the basis of assessing the impact of electricity price adjustment on consumer price index (CPI), producer price index (PPI) and growth rate of gross domestic product (GDP) as well as assessing the impact of electricity price adjustment on production industries and households.
With the above-mentioned input parameters, the electricity price plan has been developed with many different scenarios. The options are taken into consideration with the goal of gradually integrating the suspended costs in the prices, while ensuring appropriate conditions for socio-economic development, considering macroeconomic situation. Electricity price options have been reported to the Steering committee for Price regulation before being submitted to the Government for reviewing and making decision.
Reporter: One of the most concerned subjects is poor households and families under preferential treatment policy. How could these subjects be affected by the expected adjustment rate of electricity price, sir?
Mr. Nguyen Anh Tuan: Poor households and families under preferential treatment policy are still supported in accordance with the Decision No. 28/2014/QD-TTg by the Prime Minister. In particular, poor households are supported with 30kWh/household/month. Families under preferential treatment policy with power consumption of not more than 50kWh/month are supported with the equivalent amount as 30kWh/household/month.
Reporter: The issue of publicity and transparency in electricity business and electricity price management are being noticed by public opinion. Could you tell us what the MOIT has done regarding this matter?
Mr. Nguyen Anh Tuan: The transparency in electricity production and business activities has been paid special attention to by the MOIT, specifically in the following:
In terms of transparency in electricity business activities, on 22nd April 2014, the Minister of Industry and Trade issued Directive No. 11/CT-BCT on strengthening publicity and transparency in electricity business activities.
Since the issuance of Directive No. 11/CT-BCT, the MOIT has made it public, monthly and quarterly, on the website of the Ministry about USD exchange rate, coal price, oil prices in the country and in the world, gas prices, purchasing power structure, average monthly electricity purchase price, maximum load and usable capacity of the power system, etc.
Regarding publicity of electricity production and business costs in 2017 of EVN. In 2018, on the basis of the audited report on electricity production costs of EVN in 2017, the MOIT has established an inspection delegation to inspect the electricity production and business costs in 2017 of EVN with the participants from: Ministry of Industry and Trade, Ministry of Finance, Ministry of Labour, War Invalids and Social Affairs, National Assembly’s Economics Committee, the Government Office, Vietnam Electrical Engineering Association, Vietnam Standard and Consumers Association, Vietnam Chamber of Commerce and Industry.
On 30th November 2018, the MOIT chaired a press conference to publicize the inspection results of 2017 electricity production and business costs of EVN. At the conference, the MOIT made it public the information such as: Power output, costs of each stage (power generation, power transmission, distribution and retail, auxiliary - industry management); electricity production and business costs applicable to districts and communes where the power system is not connected to national power grid; Income from activities related to electricity production and business and expenses which is not included in electricity production and business prices in 2017. MOIT sent press releases to press agencies promptly and posted the content on the website of the MOIT so as to publicize it.
After EVN has reported the audited electricity production and business costs and prices in 2018, MOIT continues to establish an inter-ministerial inspection mission to inspect electricity production and business costs of EVN in 2018 and hold a press conference to announce the inspection results in accordance with regulations.
Reporter: Sir, what is Vietnam’s current electricity price compared to that in the region and the world?
Mr. Nguyen Anh Tuan: Statistics of electricity prices of 25 countries in 2018 including developed and developing countries, including Laos, the Philippines, Indonesia, Cambodia, China and India, the electricity price of Vietnam in 2018 was at 0.074USD/kWh which is the lowest price among the countries of statistics.
Comparing the statistical data of Vietnam’s electricity price in 2018 with other countries’ in the region, Vietnam’s electricity price is 91.9% of China’s and India’s; 81.7% of Lao’s; 73.5% of Indonesia’s; 50.4% of the Philippines’ and 38.7% of Cambodia’s electricity price.
If the electricity price is adjusted to increase at 8.36% compared to the current average electricity price, Vietnam’s electricity price will reach 0.08USD/kWh (exchange rate on 5th March 2019), this price is equivalent to China’s and India’s.
Reporter: Thank you very much, sir!