EVN workers perform checks on a transmission grid in the central province of Quảng Trị. — VNA/VNS

HÀ NỘI — In an effort to address financial challenges faced by Vietnam Electricity (EVN), the Ministry of Industry and Trade (MoIT) has put forth a proposal to increase electricity prices in 2024.

The suggested price adjustment aims to provide EVN with a sustainable revenue stream for its power plants' operation and more accurately reflect the group's input costs.

During a recent meeting of the Price Steering Committee, Deputy Minister of Industry and Trade Phan Thị Thắng said a comprehensive review of prices was required to ensure alignment with the dynamic input parameters and secure funding sources for power plant investors.

"The MoIT will provide guidance to EVN to operate the electricity pricing plan in compliance with regulations." said a statement released by the ministry.

In an earlier developments, Deputy Prime Minister Lê Minh Khái called for more proactive preparation and strategic planning among ministries and sectors in line with the market roadmap for adjusting the prices of essential goods, including electricity.

He stressed the importance of timely calculations and adjustments in response to market conditions to achieve the goal of controlling inflation.

An EVN's executive meeting earlier this year also highlighted the need for adjusting electricity prices. Nguyễn Hoàng Anh, chairman of the State Capital Management Committee (CMSC), warned that failure to increase electricity prices could exacerbate the group's current loss of VNĐ17 trillion (US$690 million).

Despite two adjustments to the average retail electricity prices last year, EVN continued to report losses from electricity production and business for the second consecutive year. By the end of 2023, the group reported a consolidated pre-tax loss of approximately VNĐ17 trillion, VNĐ9 trillion lower than the figure of the previous year.

EVN attributed the significant loss to selling prices remaining lower than the group's costs. Calculations by the group indicated that the total average cost of electricity generation, transmission, and distribution processes was VNĐ2,092.78 per kWh, while the average selling price was VNĐ1,950.32 per kWh, resulting in a loss of VNĐ142.5 for every kWh sold.

While adjusting electricity prices is anticipated to have a limit ed impact on the Government's CPI target of below 4 per cent, concerns were raised by economist Dr. Nguyễn Đức Độ about potential difficulties for electricity-intensive businesses and a segment of the population.

He emphasised the need for the State to carefully calculate the quantity and timing of adjustments to balance the interests of businesses, the public, and the State.

Prof. Dr. Đinh Trọng Thịnh from the National Academy of Public Administration stressed the importance of transparency in EVN's pricing and business operation to avoid negatively impacting public sentiment.

He called for greater efforts in communication to clarify any concerns among the general public about the consistently upward trajectory of electricity prices in recent years.

Thịnh said that electricity prices should be subject to market mechanisms, rising and falling in response to changes in the prices of oil, gas, and coal. This approach, according to him, would help normalise expectations among the public and prevent significant disruptions with each adjustment.