Despite a new regulation allowing electricity prices to be changed based on market conditions in June, officials say more time is needed before they can put the rule into effect.

The government has said power prices will be adjusted as often as once every three months if input costs rise or fall. The policy is set to take effect at the beginning of June, replacing the current practice of having prices changed once every year.

Deputy Industry and Trade Minister Hoang Quoc Vuong said the ministry has been asked by the government to issue instructions on how to calculate power prices based on three key cost factors – foreign exchange rate, fuel cost and output.

However, with much work needing to be done, it’s unlikely that power prices can be adjusted based on market conditions right on June 1, Vuong told a press briefing in Hanoi on Friday.

Dinh Quang Tri, deputy general director of national utility EVN, also said it’s unlikely that calculations and adjustments of power prices can be completed by June 1. He refused to give a timeframe for the next change in prices.

Huge losses

Vietnam raised the average electricity price by more than 15 percent at the beginning of March, to VND1,242 per kilowatt-hour. The increase was aimed at making the sector more attractive to investors and covering part of the losses suffered by EVN.

Tri said on Friday that the utility posted a loss of VND8 trillion (US$383.6 million) in 2010 and also owed huge debts to coal group Vinacomin and state oil company PetroVietnam.

He noted that even though retail power prices have gone up since March, EVN will need to wait until the end of this fiscal year to collect all its revenues and begin repaying debts.

EVN is still investing around VND3 trillion, or 3 percent of its total investment outlay, to sectors beyond its main function, but the group has said it will divest from these non-core businesses.

EVN Telecom, a unit of EVN, planned to sell a 49 percent stake to FPT Corp, Vietnam’s top technology services firm. However, FPT announced earlier this month that it was cancelling its purchase plans.