Retail electricity prices in Vietnam could rise by up to 10 percent if a proposal by the Ministry of Finance’s Price Control Department is approved by the government. It has sought a hike in the average power tariff of at least 6.8 percent to VND1,414 (7.6 US cents) per kilowatt hour, and a maximum of 10.7 percent to VND2,225 (12 cents).

The department’s chief, Nguyen Tien Thoa, said the proposal is based on coal prices and a 6.8 percent increase would enable the power sector to buy coal at reasonable prices, preventing losses for the coal industry.

In separate recommendations, the Ministry of Industry and Trade have proposed a 4.9 percent hike to VND1,019 (5.5 cents) and the state-owned Electricity of Vietnam (EVN) sought an increase of 6.2 percent to 13.8 percent.

EVN sought the hike after coal monopoly Vinacomin asked the government to raise the price of coal sold to the power sector by as much as 149 percent this year.

Deputy Minister of Industry and Trade Bui Xuan Khu told the media last week that retail electricity prices would continue to be increased until they reach parity with tariffs in the region and around the world.

It may take 30 years for Vietnam to have a competitive electricity market, he said.

Demand for electricity in Vietnam is expected to grow 14 percent this year on the back of an economic recovery, the government said in August last year.

Compiled by Thuy Hang