Industry Minister Hoang Trung Hai May 9 approved the Electricity Regulating Agency of Vietnam with assistance from the World Bank’s experts, to outline regulations of defining new retail power prices as a move to prepare for official operation of completive power market in 2009, state media reported.
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 (52.62 US cents) per kWh and will continue going up by 4.5 per cent to VND890 (US$55.62 US cents) per kWh in the near future.
From now onto 2010, the Prime Minister will continuously decide retail power prices. However, commerncing 2010, the government leader will only work out frames for the prices that will be defined by power companies based on market rates.
ERAV chief Pham Manh Thang said that strong points of new retail power pricing plan are to encourage power companies to reduce costs, improve their performances and ensure stable and standardized electricity prices.
The plan facilitates supervision of price defining and service quality, Thang said; however, elaborating that it poses challenges, specifically, difficulties in rural electrification on equitization of power distribution companies.
Talking about the plan, ERAV proposed that equitized power retailing companies must adjust their costs based on performance effectiveness from 2010. At the time, ERAV will regulate ceiling prices of the companies in appropriate to their performance indexes at the price defining period.
Meanwhile, power companies should look for and increase their profits by enhancing production effectiveness, reducing costs and defining selling prices under the ceiling levels.
State should establish public interest funds for transparent compensations, noted ERAV.
The Ministry of Industry is trying to build a fully competitive power generation market in 2009, under the Government approved roadmap.
Under 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, with the sector aiming to provide a competitive power generation market in the period of 2005-2014.
Between 2015 and 2022, the market will operate on the wholesale business model, while the last phase will feature a competitive retail market after 2022, in which the period of 2022-2024 will be a pilot period for the competitive retail market, and a fully-constituted competitive retail market that will be applied across the country after 2024.
(Local sources)
Vietnamese
