According to EVN, in the long run, if financial stability can not be maintained, lending institutions will have a negative judgment. Of course, they will not provide loans if the business loss persists. The fact shows that due to low electricity prices for a long time, despite the availability of private investment incentive policy, the number of domestic and foreign private businesses engaged in investment in power plants and power grids is very modest, except for certain easy-to-make and high-priced electricity sources such as gas turbines, renewable energy.
In the context that the competitive electricity market has taken effect, the electricity pricing adjustment reflecting fluctuations in the world energy market is an irreversible game.
In reality, the recent Government terms have shared a common policy of introducing market-based electricity prices, ensuring that electricity sales are proper and sufficient, towards eliminating energy price subsidies.
Sharing about this issue, Mr. Nguyen Van Vy, Vice Chairman of the Vietnam Energy Association said: “I completely agree with the policy because it is completely consistent with the electricity pricing policy specified in the Electricity Law, which creates favorable conditions for economic sectors to invest in electricity development with reasonable takings. Electricity price should be based on the market mechanism under the State’s regulation in line with the development levels of the electricity market.”
Also according to Mr. Nguyen Van Vy: "In principle, the average electricity price should be calculated and adjusted annually. However, due to many reasons, after nearly 4 years, the retail electricity tariff has not been adjusted.”
“In the condition that input parameters change, especially prices of fuels for power generation increase dramatically, many times higher than the prices being used to calculate the 2019 retail electricity tariff, the adjustment of the 2019 retail electricity tariff is reasonable and essential, in line with the Prime Minister's Decision," affirmed Mr. Vy.
Considering the proposed options on the retail electricity tariff, Mr. Ha Dang Son - Director of the Center for Energy Research and Green Growth said that after reviewing all the options including the proposed 4-step and 5-step ones, it can be seen that the 4-level option would bring greater benefits to households having an average electricity consumption level (accounting for the majority of residential customer groups).
As for the 5-step option, households using less electricity would benefit more, when compared to the current retail electricity tariff. Customers using more than 700kWh of electricity or more will have to pay more.
This option meets social security criteria, as people using less electricity and having lower payment ability can benefit more. At the same time, it contributes to influencing consumption behaviors towards economical and efficient use of electricity, when households using electricity from 700kWh or more have to pay more, compared to the current electricity tariff schedule.
Many experts believe that electricity prices need to be adjusted in line with the market mechanism, to motivate investment in the power sector
“The 5-step option is more beneficial for the majority of consumers, including poor households, and policy households while the state budget does not have to cover the increased part. Electricity bills of people using less electricity will not increase, while households using much electricity will have to pay more, in line with the principle of encouraging economical and efficient use of electricity". Mr. Ha Dang Son analyzed and stated: "The two options offered for consultation both relieve the majority of people from being much affected, even more, favorable to people in comparison with the current retail tariff" - Mr. Ha Dang Son said.
Mr. Nguyen Tien Thoa, Chairman of the Vietnam Valuation Association, viewed that, after 7 years of implementation, the current retail electricity tariff set by the Prime Minister has achieved certain results, facilitating the administration of electricity prices in a more open and transparent manner. In addition, it has complied with the electricity pricing policy regulated in the Electricity Law, making positive impacts on production, business activities, and electricity consumption.
However, so far, conditions of production, business, supply and demand, the structure of electricity consumption, and income of electricity consumers have changed and the roadmap for construction and completion of electricity market levels has been implemented, certain inadequacies have arisen in the current retail electricity tariff.
Regarding the current electricity price issue, economist Le Dang Doanh supposed that according to reports, EVN has been suffering heavy losses due to the abrupt increase in the domestic and global input fuel costs for electricity generation since the beginning of the year, leading to an upsurge of EVN's electricity production costs. Therefore, the electricity pricing adjustment becomes urgent and rational. The problem is the mechanism for price adjustment. In many countries, electricity prices are adjusted very flexibly, nighttime price is different from daytime price to encourage electricity consumption at night, avoiding grid tension. But how do Vietnamese people adapt to such a mechanism, after a long time of getting used to using low-priced stabilized electricity?
It can be seen that the requirement to adjust the electricity retail tariff is crucial, not only to meet management, production, and business needs but also to public opinions with the aim of overcoming inadequacies of the current retail electricity tariff, and better implementing the electricity pricing policy.
Ensuring covering electricity production and business costs in a reasonable manner, making electricity prices fairer for consumers, and giving convenience to the consumer administration, inspection, and supervision.
Further improving the publicity and transparency in the implementation of electricity prices; Encouraging economical use of electricity, etc.
|
Impact of fuel prices on electricity prices
The European energy market fluctuated throughout 2021. Electricity prices quadrupled, gas prices tripled and oil prices almost doubled. In France, electricity prices have doubled since the start of 2022, as a combination of factors from Asia's economic recovery sent coal and gas prices soaring.
In Asia (early April 2022), Singapore announced a 10% increase in electricity prices due to high input fuel prices. According to the announcement, SP Group will increase electricity prices for residential uses in 3 months (Q2 2022), with an average increase of 10%. Specifically, as for households, the tax-exclusive electricity price will increase from 25.44 cents/kWh (Singapore Dollar) to 27.94 cents/kWh from April 1, 2022 (about more than 4,600 VND/kWh) - 2.5 times the current average electricity price in Vietnam.
The average electricity price of Vietnam currently ranks 101th out of 147 countries (in descending order of electricity prices). The highest average electricity price in the world is 0.372 USD/kWh. In the ASEAN region, Vietnam is currently having a low average electricity price compared to most countries in the region. Even, the retail tariff of Vietnam is currently only 51% of that of the Philippines - the country with the highest electricity price in the region (0.172 USD/kWh).
|