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Electricity rates to see controlled deregulation

Update: April, 18/2012 - 10:30

Lawmakers want rates set by market, within Government guidelines

 

Soc Trang Province's Electricity Company workers install electrical grid for Khmer ethnic people in Tran De District. In addition to ensure poor households to access power, the Government is seeking more investors to power sector. — VNA/VNS Photo Ngoc Ha
HA NOI — Members of the National Assembly Standing Committee yesterday agreed that the Government should determine the average power tariff during its discussion of the Draft Amendments to the Electricity Law, but they decided that the retail price would be determined by the market.

According to Industry and Trade Minister Vu Huy Hoang, the Electricity Law, which came into effect in July 2005, stipulates that the electricity retail tariffs must be prepared by the Minister of Industry and Trade with the assistance of the Electricity Regulator and approved by the Prime Minister.

However, Hoang said that the low average power tariff in recent years (currently set at VND1,304 per kilowatt-hour) had led to losses and had discouraged other economic sectors from investing in electricity development .

In addition, the current electricity price establishment has not taken into account constant changes in the market and other factors such as exchange rates or hydrography conditions.

Phung Quoc Hien, head of the NA Committee for Finance and Budget, agreed that Viet Nam's electricity prices were lower than those of other countries in the region, but he said that allowing the market to determine the price would conflict with the draft Law on Prices, which put electricity on the price stabilisation list.

Hien said he was also concerned that the draft amendments suggested too many components for establishing the electricity price, including transmission, distribution, wholesale, other auxiliary services and fees associated with regulating the distribution of electricity.

Phan Trung Ly, head of the NA Legal Committee, said that without careful consideration, the Draft Amendments would lead to monopolisation, since Electricity of Viet Nam controled more than 57 per cent of the electricity sources and 90 per cent of the retail market.

Hien suggested that the Government should only determine the average power tariff after taking into account all market costs.

NA Chairman Nguyen Sinh Hung agreed, saying that the retail market could be determined by the providers and the Government would only be involved in certain cases, such as supporting low-income households or implementing other policies to encourage investment in the sector.

Related to the Draft Amendments to the Electricity Law, the NA Standing Committee also agreed to extend provincial People's Committee plans for electricity development from a five-year to a 10-year period to comply with the national master plan. In addition, the plan for electricity development should take into account schemes for other renewable energies such as wind and nuclear power.

Viet Nam hopes to develop a fully competitive retail power market by 2022.

On the same day, the NA Standing Committee also discussed the Law on Advertising, saying it should make the responsibilities of the party that carries the advertisements clearer with regard to the accuracy and content.

NA Standing Committee members also gave their opinions on the draft amendments to the ordinance on supporting veterans and their relatives. — VNS

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