Electricity of Vietnam Group (EVN) is calling for power price hikes after its proposal to form an electric power joint stock company was boycotted, the Vietnam Investment Review (VIR) reported.
EVN ambiguously called for the price hike, explaining that this year it will face difficulties in the operation of its newer electricity plants, according to general director Pham Le Thanh.
He claimed that a price hike will help resolve an existing capital shortage and that the present electricity price was uncompetitive.
If the government approved the proposal, foreign investors would be keen on investing in power generation projects, and EVN may be inclined to invest more if the group’s 'losses' were to be offset by a price surges, Thanh said.
EVN leader refused to elaborate on exact losses, but said that millions of dollars were lost in the first nine months this year as oil, gas, coal and power purchases from China rose.
Thanh said that EVN was in the middle of rolling out 18 large-sized power generation plants that would all be completed by 2010. However, it is facing difficulty in attracting foreign investors due to the low retail price of power, he said.
However, Deputy Prime Minister Hoang Trung Hai stressed the essential of careful consideration on the timing and level of a price increase as the government grappled with high inflation across the board.
Electricity price will remain unchanged till at least the end of the year for fears of runaway inflation, according to a government source.
Under an electricity price roadmap approved by the Vietnamese Government from January 1, 2007, average retail power prices rose by 7.6 per cent to VND842 (5-6 U.S. cents) per kilowatts-hour and will again be bumped up by 4.5 per cent to VND890 (5.56 US cents) per kWh by this October.
According to the master plan for Vietnam’s electricity market development over the next 20 years approved by the government in February 2006, the market will develop in three phases. A competitive power generation market will be developed from 2005-2014.
Between 2015 and 2022, the market will operate on the wholesale business model. The last phase will feature a competitive retail market after 2022, with a pilot period from 2022-2024 and a fully-constituted competitive retail market be applied across the country after 2024. (VIR)
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