Two EVN workers perform checks at a power station in HCM City. (Photo: VNA) Hanoi (VNS/VNA) - Vietnam Electricity (EVN)should stick to its tiered pricing model, said researchers in a conference on thisweek in Hanoi.
Vietnam's largest electricity producer barely managed tobreak even during 2016-2018 and lacks resources to maintain financial stabilityand growth, found a recent study into the EVN's operations. Researchers studiedthe company's figures such as production volume, revenue and pricing strategy.
They advised EVN to build a five-tier pricing model, sayingit's the most suitable model for Vietnam given its consumption habits anddifferent income groups. It is also less likely to impact consumers, societyand the company's revenue.
Tran Dinh Long, Vice President of the Vietnam ElectricityAssociation, said tiered pricing helps in the long run encourage people toswitch to renewable forms of energy.
"As people try to avoid paying the highest rate theycould install solar panels to keep their total consumption from the nationalgrid down. It also happens that solar panels produce the most electricityduring 1pm to 4pm, which is the peak for power consumption in Vietnam,"said Long.
Nguyen Tien Thoa, former head of the finance ministry's departmentof pricing management, said a tiered pricing model plays a crucial role inincreasing consumer awareness and helping reduce power waste.
Electricity is generated using a number of finite resources,some of which are running low on a global scale. The more electricity peopleconsume the less resources nature has to offer. That's why the electricityprice should go up as consumption rises, said Thoa.
Dr Bui Xuan Hoi from the Hanoi University of Science andTechnology (HUST) said the EVN's tiered pricing model is widely used in bothdeveloping and developed countries including Malaysia, Thailand, France, theRepublic of Korea and Australia.
Researchers urged lawmakers to establish the required legalframework to allow timely adjustments to power prices, saying prices should beproactively altered and notice must be given to the public in advance.
The study proposed power prices be adjusted twice a year, atthe beginning of March and September, times of year when power consumptiontends to fluctuate sharply - as well as whenever special global or marketevents take place that call for a price change.
Tran Van Binh from HUST's department of economics andmanagement said the electricity price must be adjusted to better reflect itsproduction cost.
"We produce electricity using different inputs. It'sonly natural for electricity price to increase when the cost of inputs rises.Take coal-fired stations for example. We used to extract coal from a mere 10metres under the ground. Now, we have to extract coal from 100-metre depth. Thecost is vastly more expensive," Binh said.
He also advised the Government not to put too much of aburden on EVN as Vietnam strives to promote the use of renewable energy. EVNhas been buying solar power at 9.5 US cent per kWh or 2,000 VND. Expertsbelieve this is not a sustainable approach financially as EVN can only sell at 1,700VND per kWh on average.
Binh said electricity is considered an essential commodityand a required input in all production activities. Any change in price,therefore, must be carefully studied to ensure it doesn't harm society orbusinesses.
Electricity prices have been adjusted seven times since 2010.The latest adjustment was at the end of 2017./.
VNA
