Vietnam energy group defends call for electricity price hikes

Aug 17, 2010, 6:19 GMT

Hanoi - The Vietnam Energy Association (VEA) Tuesday defended its call for higher electricity prices against widespread public criticism.

State media reported they had received hundreds of letters criticizing last week's proposal that Vietnam Electricity Company (EVN) raise electricity prices from 5 to 8 US cents per kilowatt-hour (kWh) for middle- and upper-income consumers.

The VEA said the move was needed to spur investment in Vietnam's power sector, which suffered widespread blackouts this summer.

The Tuoi Tre newspaper published letters saying that price hikes would lead to inflation, or arguing that EVN lacked investment capital, pointing to the company's recent moves into the mobile telephony market.

But VEA chairman Tran Viet Ngai said the public failed to understand what it would take to provide enough power for Vietnam's rapidly growing economy, where electricity demand grew 15 per cent last year.

'Let them criticize,' Ngai said. 'A cup of tea costs 2,000 dong (11 US cents). A kilowatt-hour of electricity costs less than that, but making a kilowatt-hour of electricity is a lot harder than making a cup of tea.'

Ngai said the proposal envisioned keeping prices at 3.2 cents per kWh for the first 50 kWh to protect poor consumers.

Vietnamese electricity prices are well below those in regional countries such as China and Thailand. They have fallen in dollar terms from 5.7 US cents per kWh in 1995, due to currency depreciation.

Prices have been held low to benefit poor consumers and export industries.