Low electricity prices lead to long-term consequences?

ANTD.VN - Economic expert Tran Dinh Thien - former Director of the Vietnam Economic Institute said that to develop the electricity market, the "problem" of electricity prices must be solved.

Electricity prices are not attractive to new investment in the electricity industry.

Speaking at the forum “Developing a competitive energy market to 2030, with a vision to 2045”, co-organized by the Communist Party of Vietnam Electronic Newspaper in collaboration with the Central Economic Committee; National Political Publishing House Truth on December 6, Associate Professor, Dr. Tran Dinh Thien stated that the transition to a market economy needs to focus on the competition mechanism, the core factor of which is price.

According to Mr. Tran Dinh Thien, in a market economy, prices are determined based on the principle of competition, which in turn determines the operation of the entire economic system. Specifically, in the electricity sector, electricity policy is assigned to state-owned enterprises, in which the Vietnam Electricity Group (EVN) plays a leading role. The State aims to keep electricity prices low, leading to a long-term consequence of supply shortage, putting great pressure on the economy.

Mr. Tran Dinh Thien cited that in 2023, EVN lost nearly 22 trillion VND according to a report by the Ministry of Industry and Trade. Electricity production and business alone lost 34 trillion VND.

“So, who dares to invest in the electricity industry if the electricity price and electricity price mechanism do not change?” the expert asked.

Low electricity prices - Who benefits? Mr. Tran Dinh Thien said that low electricity prices have limited investment attraction in the industry, especially in high-tech projects that consume a lot of energy. This has led to many foreign enterprises with outdated technology taking advantage of cheap energy prices to invest, overexploit resources and increase greenhouse gas emissions.

Statistics show that Vietnam's per capita electricity consumption is only 33.5% of the world average, while CO₂ emissions from energy activities doubled between 2010 and 2020. The economy's low energy efficiency puts Vietnam among the countries with the highest electricity consumption/GDP ratio.

"Low electricity prices do not really bring great benefits to the poor but mainly favor large energy consuming enterprises, especially foreign investors. As a result, the state budget is under great pressure to maintain supply and support infrastructure, while creating inadequacies in investment structure and resource allocation," said Mr. Tran Dinh Thien.

Experts also said that the Power Plan VIII has set out a roadmap for energy growth with a focus on high technology and energy saving. However, to implement it effectively, Vietnam needs to solve the problem of electricity pricing, shifting from a low-price support policy to a market competition mechanism, thereby attracting investment and sustainably developing the energy sector.

Associate Professor Dr. Tran Dinh Thien also supports the implementation of a two-component electricity price mechanism (including capacity price and electricity price), as well as proactively planning to adjust electricity prices seasonally, except in unusual cases, to both encourage investment in energy and optimize resource allocation, balance supply and demand, and reduce pressure on the national energy system.

Mr. Thien emphasized that the determination to innovate the electricity price mechanism is not only a technical issue, but also an opportunity for Vietnam to promote the development of the economy based on a competitive market. This policy will create conditions for Vietnam to successfully transition to an efficient, sustainable and synchronous energy ecosystem, meeting the development requirements in the new era.

Expressing his views on this issue, MSc. Nguyen Tran Minh Tri - Institute of World Economics and Politics, Vietnam Academy of Science and Technology said that electricity prices under the market mechanism with State regulation must ensure a harmonious combination between the goals of transparency and encouraging healthy competition in production, transmission, distribution, retail, and economical and efficient use of electricity.

Source: https://www.anninhthudo.vn/gia-dien-thap-dan-den-he-qua-lau-dai-post597624.antd