Vietnam Industrial Parks InfoGate ! Industrial Zones ! Export Processing Zones ! MOIT proposes 20% reduction in morning peak hour electricity price

MOIT has suggested three options:

In the first option, the 20 percent price decrease during morning peak hours is applied to those enterprises which have one production shift per day, while the peak hour electricity price is unchanged for enterprises which have two or three production shifts.

In the second option, 20 percent is deducted directly from electricity bills. The subjects eligible for the deduction are enterprises which use electricity with the voltage of 35KV and less.

In the third option, the 20 percent reduction in the morning peak hour prices is carried out based on the figures shown on electric metres which would be installed. Those eligible for the reductions are enterprises which use electricity with the voltage of 35 KV and less. If the last option is chosen, it is estimated that 50,000 meters will be installed.

In the document sent to the Prime Minister, Deputy Minister of Industry and Trade Do Huu Hao said that the first option is most feasible. It would help the Electricity of Vietnam save money as it would not have to set up metres again.

Deputy Minister of Industry and Trade Bui Xuan Khu, in a recent interview with the local press, said since after the morning peak hour pricing scheme was applied, a lot of localities and enterprises have proposed removing the scheme as their production costs are higher. However, a survey by the Ministry of Industry and Trade on the impacts of the new pricing scheme on enterprises showed that the majority of enterprises (more than 70 percent) have had electricity bills increase by less than 10 percent.

The survey also pointed out that the ratio of the increase in the spending for electricity bills to the total turnover of enterprises after the morning peak hour pricing scheme was applied is low, between 0.08 and 0.57 percent in April, and 0.04 and 0.69 percent in May 2009.

The figures have made the Ministry of Industry and Trade think that the proposal on removing the peak hour pricing scheme is not reasonable. The ministry’s official viewpoint is that the electricity prices in morning peak hours could be lowered, while the number of morning peak hours will not be lowered.

Statistics show that in the last two years, the demand for electricity has become higher in the morning, from 9.30 am to 11.30 am, while the additional charge during that time is even higher than in the evening.

“The morning peak hour scheme exists in many countries in the world as well, not only in Vietnam,” Khu said. “The morning peak hour scheme needs to be set up not because it aims to collect more money for the Electricity of Vietnam, but aims to encourage businesses to avoid organising production in peak hours, thus helping ease the pressure on the electricity supply.”