Power price hike puts more pressure on inflation next year
The recent hike of electricity retail price will add more pressures to inflation next year as it can affect many other industries and sectors.
The average electricity retail price has officially increased from VND1,622 (7.1 cent) to VND1,720 (7.6 US cent) per kWh since early this month.
According to a calculation of the General Statistics Office, the power price hike will drive the CPI to rise 0.08 percentage points and 0.1 percentage points in 2017 and 2018, respectively.
However, economist warned that despite a minor adjustment, the electricity price rise will affect some certain economic sectors. They urged to enhance control to avoid “domino” effects which can put pressure on local consumers and enterprises.
The electricity price hike, which is the first in the past nearly three years, has also stirred a lively debate among locals.
In response to media’s inquiry over the rise, Industry and Trade Deputy Minister Do Thang Hai said it had been carefully calculated by the Ministry of Industry and Trade, the Electricity of Vietnam (EVN) as well as other government agencies.
The possible impacts ranging from macro-economics to micro-economics like those on production, business input of enterprises, as well as impacts on the prices of other essential commodities as cement, steel have been also taken into account.
“We think that over the past time, since March 2015 (when the previous electricity price hike took place), the price of electricity had experience no adjustments, while input costs for electricity production have risen rapidly, especially coal,” Hai said.
The ministry said the price adjustment was calculated based on EVN’s power production costs in 2016. The results were independently audited by Deloitte Vietnam Company.
A report by the ministry showed that last year, the power output was 159.8 billion kWh while electricity loss rate was 7.57 percent, which was 0.37 percentage points lower than that of 2015.
Total electricity production cost was VND266.1 trillion ($11.72 billion) while the total revenue was VND265.5 trillion ($11.7 billion) last year. The electricity sector therefore reported a loss of VND593.4 billion.
In 2016, it cost over VND1,665 to produce one kWh while the price was sold at some VND1,622 per kWh during the year.
Commenting on the hike, senior economist Ngo Tri Long said there are two notable things that can be deduced from the latest electricity price rise.
Firstly, in the previous price hikes when the rise proposals were made in advance and open for discussions, after that the actual adjustment option would be made. However, this time, the rise was made at once without any notification in advance.
Secondly, Long agreed with the Ministry of Industry and Trade’s explanation of the rise, citing that the real reason for price is the 2016 electricity production cost stayed higher than the price for sales, which caused losses for the sector.
However, he said the rate of electricity losses of the sector remains high compared to that of the region and the world, while the number of labors working for the sector hit over 100,000. As such, without any improvement in labor productivity and decrease in power losses, the electricity prices in Vietnam would maintain high, causing loss for local consumers.
According to a calculation of the General Statistics Office, the power price hike will drive the CPI to rise 0.08 percentage points and 0.1 percentage points in 2017 and 2018, respectively.
However, economist warned that despite a minor adjustment, the electricity price rise will affect some certain economic sectors. They urged to enhance control to avoid “domino” effects which can put pressure on local consumers and enterprises.
The garment industry will be affected by the electricity price rise.
|
In response to media’s inquiry over the rise, Industry and Trade Deputy Minister Do Thang Hai said it had been carefully calculated by the Ministry of Industry and Trade, the Electricity of Vietnam (EVN) as well as other government agencies.
The possible impacts ranging from macro-economics to micro-economics like those on production, business input of enterprises, as well as impacts on the prices of other essential commodities as cement, steel have been also taken into account.
“We think that over the past time, since March 2015 (when the previous electricity price hike took place), the price of electricity had experience no adjustments, while input costs for electricity production have risen rapidly, especially coal,” Hai said.
The ministry said the price adjustment was calculated based on EVN’s power production costs in 2016. The results were independently audited by Deloitte Vietnam Company.
A report by the ministry showed that last year, the power output was 159.8 billion kWh while electricity loss rate was 7.57 percent, which was 0.37 percentage points lower than that of 2015.
Total electricity production cost was VND266.1 trillion ($11.72 billion) while the total revenue was VND265.5 trillion ($11.7 billion) last year. The electricity sector therefore reported a loss of VND593.4 billion.
In 2016, it cost over VND1,665 to produce one kWh while the price was sold at some VND1,622 per kWh during the year.
Commenting on the hike, senior economist Ngo Tri Long said there are two notable things that can be deduced from the latest electricity price rise.
Firstly, in the previous price hikes when the rise proposals were made in advance and open for discussions, after that the actual adjustment option would be made. However, this time, the rise was made at once without any notification in advance.
Secondly, Long agreed with the Ministry of Industry and Trade’s explanation of the rise, citing that the real reason for price is the 2016 electricity production cost stayed higher than the price for sales, which caused losses for the sector.
However, he said the rate of electricity losses of the sector remains high compared to that of the region and the world, while the number of labors working for the sector hit over 100,000. As such, without any improvement in labor productivity and decrease in power losses, the electricity prices in Vietnam would maintain high, causing loss for local consumers.
11:12, 2024/05/15
PM calls for tighter controls on e-cigarettes and heated tobacco products
Local authorities in communes across Vietnam are asked to regularly supervise the prevention and control of e-cigarettes and heated tobacco products and strictly deal with related violations.
11:36, 2024/05/14
EU helps Vietnam cut plastic litter in oceans
Vietnam expects more cooperation and financial support from the EU to adapt to climate change and promote environmental protection and restoration of land, forest, and marine ecosystems.
21:31, 2024/05/07
Vietnam needs urgent regulatory framework to control e-cigarettes: Officials
Most e-cigarettes contain toxic substances such as nicotine, metal, and formaldehyde, causing loss of control, lack of concentration, and impaired memory.
21:44, 2024/05/03
Hanoi's largest incinerator to process one million tons of waste this year
The plant will have a positive impact on waste management, which has long been a source of frustration for local residents.
23:05, 2024/05/02
Jan-April job growth impressive in Hanoi
Hanoi plans to provide employment opportunities for 20,000 people in 2024 by holding 230 job transaction sessions through online, specialized, mobile, and direct recruitment forms.
18:24, 2024/04/29
Supermarkets in Hanoi offer promotions during national holidays
Big promotions at supermarkets will be an attractive shopping experience for Hanoi residents who have not left the city to travel during the ongoing holidays.
- Passengers crowd bus stations in Hanoi to move away for holidays
- Hanoi takes drastic action against environmental violations
- Voluntary social security should cover larger part of informal sector: Experts
- Excellent quality goods aim further than domestic market
- Hanoi launches occupational safety action month
- Hanoi digitizes public transport ticketing