VINACHEM

The Ministry of Industry and Trade has turned down a proposal of State-run energy firms to increase electricity tariffs to offset their losses caused by the recent fall of the Vietnam dong against the U.S. dollar.

The ministry’s rejection was notified by the Electricity Regulatory Authority of Vietnam at a seminar on electricity pricing held by the Government’s portal in Hanoi on September 29.

The exchange rate is just one of the factors constituting the production cost of electricity, said the authority’s head, Nguyen Anh Tuan.

Vietnam Electricity Group (EVN), Vietnam National Coal and Mineral Industries Group (Vinacomin) and Vietnam National Oil and Gas Group (PVN) have proposed hiking electricity prices to compensate for the losses resulting from exchange rate volatility.

The electricity generation cost is decided by prices of oil, gas or coal, exchange rate and transmission cost, among others. The Ministry of Industry and Trade will take these into account when considering electricity tariff increases, according to Tuan.

Generation cost has dropped owing to lower oil and coal prices. Therefore, it is not reasonable to hike electricity tariffs due to the impact of the volatile exchange rate.

Talking about the electricity retail prices of 2016 and 2017, Hoang Van Thuy, deputy head of the finance department at EVN, said EVN had drawn up a retail pricing scheme for the ministries of industry-trade, finance and the State Bank of Vietnam to consider.