The Government has agreed to raise the cost of electricity from next month, the third March in a row the price has been adjusted in Viet Nam.

Prime Minister Nguyen Tan Dung has asked the Finance Ministry and the Ministry of Industry and Trade (MoIT) to complete the final proposal for the increase soon.

An anonymous official from MoIT said that the average household electricity price would increase by 15 per cent from just over VND1,000 (US$0.05) per kWh.

If approved, this would be the biggest ever electricity price hike in the country’s history.

Last March, the Government decided to raise the retail power price by 6.8 per cent against 2009, compared to the 10.7 per cent proposed by MoIT and the Finance Ministry.

Last year’s increase was based on the price of coal in 2010.

Power price hikes in Viet Nam mainly affect households that are already subsidised by the Government rather than industries that pay the full market price.

Households consume about 38-40 per cent of electricity sold in the country.

The Prime Minister also asked MoIT to make stronger efforts to ensure power production and supply and to speed up the implementation of power plant projects.

Power cuts would start on Tuesday in the wake of the country’s power crisis but this time, provincial electricity regulators would decide where and when to cut the power in their areas, MoIT said.

The demand for electricity in the first six month of this year was forecast to rise by 18 per cent against last year while electricity production would be up by only 14 per cent.

The PM also asked MoIT and the Finance Ministry to adjust the price of other essential goods, including coal and oil, in accordance with market prices.

However, policies supporting the poor must be given an emphasis, said Dung.

More efforts must also be spent now to control the trade deficit, to make it less than 18 per cent this year, an important goal already set for the country, he said.

Non-urgent Government projects were also told to make cut backs in a bid to help the country control inflation.

Source: VNS