Ministry of Industry and Trade proposes to continue increasing electricity prices in 2024

The Ministry of Industry and Trade 's proposal to increase electricity prices comes amidst EVN's difficult financial situation, having incurred losses of approximately 17,000 billion VND last year.

At the Steering Committee on Prices meeting earlier this week, the Ministry of Industry and Trade proposed adjusting electricity prices this year.

Last year, the average retail price of electricity increased by 7.5%, to 2,092.78 VND per kWh, after being adjusted twice by authorities in May and November.

The mechanism for adjusting retail electricity prices follows Decision 24/2017, which stipulates a 6-month interval between adjustments if a review and inspection of input costs results in a price increase of 3% or more. Most recently, electricity prices increased by 4.5% in November 2023.

According to the Ministry of Industry and Trade's proposal, if approved by the competent authorities, the next price increase could take place in May of this year.

The Ministry of Industry and Trade proposes a further increase in electricity prices in 2024. (Illustrative image).

The Ministry of Industry and Trade's proposal to increase electricity prices is due to fluctuations in input costs and to provide the Vietnam Electricity Group (EVN) with the resources to pay investors in power plants.

EVN stated that despite efforts to reduce costs and two adjustments to retail electricity prices, it was still unable to offset the increased cost of purchasing electricity. Therefore, EVN failed to balance its production and business results in 2023.

With the average retail electricity price increasing by 4.5% on November 9th to 2,006.79 VND/kWh (following a 3% increase on May 4th), EVN stated that this increase only boosted revenue by approximately 3,200 billion VND, which is insufficient to offset the group's production and business costs. Exchange rate differences exceeding 14,000 billion VND from previous years were also not factored into the electricity price calculation.

Following two electricity price increases in 2023, EVN still recorded an estimated loss of VND 17,000 billion, with the parent company alone losing VND 24,595 billion in 2023. Overall for 2022-2023, the group's loss totaled nearly VND 38,000 billion, not including the outstanding exchange rate difference from previous years (approximately VND 14,000 billion).

EVN explained that several input factors affect costs. In addition, fuel prices, although lower than last year, remain high compared to previous years.

Speaking at the recent 2023 year-end review conference of Vietnam Electricity Group (EVN), Mr. Dang Hoang An, Chairman of EVN, stated that if the financial situation does not improve soon, the lives of employees will be affected, and many employees with low salaries will leave the industry.

Meanwhile, Mr. Nguyen Hoang Anh, Chairman of the State Capital Management Committee at enterprises, also stated that if electricity prices are not increased, it will be impossible to resolve EVN's accumulated losses.

By PHAM DUY/ VTC News

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