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Consumers brace for power rates

Update: February, 18/2009 - 00:00

Consumers brace for power rates

(19-02-2009)

HA NOI — Domestic customers will turn off the lights and take less hot showers following power price hikes scheduled for next month, but businesses won’t find it so easy to save on the job or absorb the costs.

A boarding house manager in My Dinh Zone, Tu Liem District, who introduced herself as Le Thi Ban, said she had asked her tenants to reduce electricity use to counter the new price.

Ban said she had known about the pending increase for some months but that would not dampened the impact when it finally came into force.

But Ban said she was not unduly worried for herself, because she had the income from rent, but she worried more about her tenants, who were mostly students and had to pay about 10 per cent more on the fee.

Ban said that she and her tenants had considered changing neon lights into compact lights and regulating the time electricity was used.

The new market-based electricity rates are to take effect on March 1 when retail prices, excluding value added tax, will average VND948.5/kWh, up 8.92 per cent over last year.

Others residents in the city also had concerns.

Housewife Nguyen Thi Vinh, in Ha Noi’s Nam Dong Ward, said she wasn’t worried about the increase because she could cut down on the use of electricity. But she worried that the price increases would flow into other commodities.

"No one can be sure that water, food and goods won’t rise following the increase," Vinh said, recalling 2007 when prices increased across the board on the back of an electricity price hike.

In the business community, there was a mixed reception. Some were not happy with the increases, coming as they did on top of a downturn caused by the world finanicial crisis.

Truong Thanh Tung, director of a business in HCM City’s District 8, said although electricity accounted for only 0.05 per cent of production expenses, with orders down and the price of materials up, the electricity fee increase would put a greater burden on enterprises.

However, leaders of Ha Tien No 1 Cement Company, Binh Minh Joint Stock Company and Tan Binh Electronics Company said the increase was unavoidable so accept it.

Meanwhile, the business circle has asked Electricity of Viet Nam to ensure continuous power distribution and reduce power cuts so enterprises could manage their business efficiently, boost production and increase profits to pay for the power price surge.

The businesses also asked electricity companies to inform their customers five days before a power cut, outlining the full reason, so business managers could prepare for them.

The Ministry of Industry and Trade had calculated that producer industries will have to pay a total of VND2.3 trillion more for electricity while an additional VND300 billion was tipped for administrative sectors.

Officials calculated that ordinary people had to pay VND2,500 to 32,000 (US$0.14-1.8) more per month for their consumption of 50-400 kWh.

Responding to the prediction of flow-on effects of 3 per cent increase to other commodities, HCM City Industry and Trade Department director Nguyen Van Lai said his department would strengthen its surveillance of customers and providers.

Violators who tried to increase their price following the power hike would have to answer to the department.

Deputy Prime Minister Hoang Trung Hai said the electricity price increase was a buffer for change next year when the electricity price would be allowed to fluctuate with the market.

Furthermore, it was logical that the electricity industry should be in harmony with other industries, he said. — VNS

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