Power struggle amidst losses incurred by the Electricity of Vietnam (EVN)
Vietnam's Ministry of Industry and Trade (MoIT) is considering a plan to help Vietnam Electricity (EVN) address a multibillion-đông deficit in its accounts. The proposal, part of the third draft amendment to Decree 72/2025 on the mechanism and timing of retail price adjustments, aims to help EVN cover costs and secure state investment capital.
The draft amendment is currently under review by the Ministry of Justice and is expected to be submitted for approval this month. The plan involves recovering accumulated losses by folding past costs into retail electricity prices.
MoIT has proposed two options for the plan's implementation, but the specifics of these options were not detailed in the provided paragraph. The first option allows EVN to spread unallocated production and supply costs into electricity prices based on audited financial reports from 2022 onward, and continue in future years. The second option applies only to costs incurred between 2022 and the date the decree takes effect, without rolling forward.
In 2022-2023, EVN reported cumulative losses of around VNĐ50 trillion, which narrowed to VNĐ44.8 trillion by the end of 2024. As a result, electricity tariffs could edge up by 2-5% by the end of the year, according to the MoIT. However, the new rules are expected not to trigger major price shocks, with the proposal's proponents emphasising that electricity price management will follow a clear roadmap, avoiding sudden hikes while ensuring economic stability and balancing the interests of businesses and households.
Under a scenario of a 3% increase from October, the consumer price index (CPI) would rise only 0.03 percentage points for the year. This suggests that the impact on consumers may be minimal. The name of the minister who developed the proposal for cost coverage at Vietnam Electricity is Nguyen Hong Dien.
The draft amendment to Decree 72/2025 now considers factoring in foreign exchange differences from revaluations and unsettled exchange rate gaps of power plants. This means that the changes in exchange rates and any outstanding differences in foreign exchange rates will be taken into account in the electricity prices.
The MoIT has emphasised that the plan is designed to help EVN cover costs and secure state investment capital, rather than to generate profits. The ministry has also emphasised that the plan will be implemented in a transparent and accountable manner, with any differences clearly reflected in audited reports before being included in the electricity prices.
In conclusion, the Ministry of Industry and Trade's proposal to address EVN's deficit and adjust electricity tariffs is currently under review. The plan aims to help EVN cover costs and secure state investment capital, while minimising the impact on consumers and ensuring economic stability. The specifics of the plan's implementation are yet to be detailed, but the MoIT has emphasised that the plan will be implemented in a transparent and accountable manner.
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