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EVN offers lowest electricity prices to manufacturing sector

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The Electricity of Vietnam’s (EVN) plan to sell electricity to manufacturing enterprises at the lowest price level will only bring benefits to foreign invested enterprises (FIEs) and eat into people’s pockets, analysts say.

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Manufacturing enterprises would bear the lowest price level

 

Under the draft price framework, manufacturing enterprises would bear the lowest price level, equal to 51 percent of the average retail price. 

Meanwhile, there are six price levels for household-use electricity. Those who consume 0-50 kwh a month will bear the price equal to 92 percent, 51-100kwh 95 percent and more than 400 kwh 159 percent of the average retail price.

“The drafted price levels will lead to a fierceconflict of interest between two groups of customers – manufacturing sector and households, and will hurt common people’s pocket,” said Nguyen Van Ngai from the HCM City Agriculture and Forestry University.

Ngai said that EVN was right when setting price levels in accordance with the time of electricity use to encourage consumers to save electricity and restrict use of in peak hours. However, it is wrong to give a big favor to the manufacturing sector.

“I understand that Vietnam needs to create the most favorable conditions for the manufacturing sector to develop. However, it is also necessary to apply policies to support household consumers,” Ngai said.

The average income remains relatively low, and if imposing high retail prices, people will be burdened. 

Le Dang Doanh, a respected economist, noted that the number of households enjoying the preferential retail price will be inconsiderable, because the preferential price will be applied only to households that consume less than 50 kwh a month, i.e they can only have one or two lights in their houses.

An analyst warned that if the manufacturing sector can use electricity at low prices, it would not consider renovating technology and production lines. The policy, therefore, will accidentally encourage enterprises to use outdated technologies.

Elaborating on this, the analyst said enterprises tend to import technologies and equipment from China which have low prices. If enterprises do not pay much for electricity bills, they will continue using cheap Chinese technologies, even though the technologies cause pollution and consume ba lot of energy.

He also pointed out that the low electricity prices will mostly benefit foreign invested enterprises (FIEs) and big manufacturing enterprises. 

However, FIEs mostly do outsourcing. They make products for export and transfer the profit they make in Vietnam to their home countries.

 

 

Source: VietNamNet

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