Three-level pricing system applied to production facilities, businesses and service sector 

The latest circular from the Ministry of Industry and Trade (MoIT) stipulated that electricity prices would increase by 5% to VND 1,304 (US $0.06), excluding VAT, per kWh from December 20.

However, the increase will not apply to the first levels on the graduated pricing chart, which starts from 0-50kWh for low-income families, who normally use less than 50kWh of electricity per month, as well as those who use from 0-100kWh. Poor families would be required to register and prove they use less than 50kWh of electricity a month.

As a result, the increase would be calculated from the 101st kWh of electricity.

The three-level pricing system will be applied to those who use electricity for production, business and services with 25kVA transformer or higher, or those with the average bill of 2,000kWh or more over three consecutive months.

People who use electricity for agriculture irrigation will also be included in this group.

Electricity charges will also vary depending on the time of day. During peak hours, prices will be double than those of regular hours, and triple hours of low usage.

Peak hours are between 9.30-11.30 and 17.00-20.00 (excluding Sunday); normal hours are between 4.00-9.30 and 11.30-17.00 (from Monday-Saturday) and between 4.00-22.00 on Sunday; and low usage hours from 22.00-4.00 everyday.

According to the MoIT, despite this price hike, the electricity producers will still incur losses.

The Electricity of Vietnam (EVN) reported that they suffered a loss of VND 10.162 trillion (US $500 million) in electricity generation business due to low output from hydro-power plants in 2010, result of insufficient water supply.

EVN had to utilise its oil-fired plants and purchase additional electricity at high prices, which caused their operating costs to soar. Increased fuel prices and unfavourable exchange rates also contributed to rising expenses.

Increasing the price of electricity is seen as a necessity for long-term development of a socialist-oriented market economy, as well as the formation and development of a stable and sustainable electricity market in Vietnam, said EVN Deputy General Director Dinh Quang Tri.