Vietnam announces major hikes in electricity rates

Vietnam is facing higher pressure on consumer price increases after the government has approved a proposal to hike electricity rates, coupled with a dong devaluation of 8.5%. According to the proposal, power prices, which averaged at VND1,077 (5 US cents) per kWh, are expected rise by nearly 20%. The Ministry of Finance put forward three solutions, with the lowest hike being over 10% and the biggest amounting to 50%. A Ministry of Industry and Trade senior official said the less-than-20% escalation in power rates would cause production costs to jump 1% to 10%. The power sector is selling electricity at a price that is 40% below cost, so a price adjustment of less than 20% would help reduce the sector’s losses to VND15 trillion (US$718.5 million). (February 17, 2011)