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Electricity price increase: Experts still of two minds   2009-02-17 - VietNamNet/VnMedia

Experts, on one hand, say that the electricity price increase is unavoidable, on the other hand, still have concerns about implementing the price increase at this moment and possible negative impacts.


Dr Nguyen Minh Phong from Hanoi Economics Research Institute


In fact, the electricity price increase has been expected, as this is a part of the electricity price process approved by the government. Moreover, it is very likely that raising the electricity price is a part of the plan to help increase the state budget collection in the context of budget collection decrease due to the slowdown of exports.


However, it is still necessary to consider the negative impacts of the electricity price increase. It seems that price increases are contrary to the current trend, as the global economy has been spiralling down and commodity prices have been decreasing.


The electricity price increase will lead to the increases of input costs in many production fields, could increase inflation, and peoples' expenses, all of which are contrary to the government’s policy on stimulating demand and consumption.


We cannot say that Vietnam needs to raise the electricity price in order to apply a market price for electricity. As the electricity market is yet to be a competitive market, we cannot have a market electricity price.


Moreover, I have doubts about the conclusion that the electricity price will not have big impacts on production and business, and peoples' lives. The figures about possible impacts shown by state management agencies have not been checked by any independent institutions.


Dr Cao Sy Kiem, member of the National Advisory Council for Finance and Monetary Policies


The electricity price increase will certainly lead to the price increases of several commodities. However, I have to say that the price increase proves to be a process which cannot be delayed anymore. We are striving for a market economy, and we have to do all the things to reach that end.


Moreover, I think that the price increase is not big, less than 10%. Among the suggested plans, the chosen one proves to be the most reasonable for now.


Pham Chi Lan, senior economist


In the long term, the power industry needs to operate under the market mechanism, i.e. the electricity price needs to be defined in accordance with the market economy’s rules.


However, I still have worries about the electricity price increase as the whole national economy, businesses and people are meeting big difficulties, while the government is undertaking measures to stimulate demand, trying to help businesses cut expenses. The electricity price increase will lessen the effectiveness of the government’s efforts to stimulate demand.


I, as a consumer, think that we need a transparent mechanism in calculating the electricity production cost. Last year, the Electricity of Vietnam complained that the low electricity price brought losses, but it then attempted to give VND1tril to its staffs in bonuses for fulfilling the yearly business plan.


The prime minister has approved the mechanism on electricity sale price adjustment, under which the Ministry of Industry and Trade has the power to adjust the electricity price to make it higher or lower by 5% at maximum.

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