Under Prime Minister Decision No. 02/2023/QD-TTg, dated February 3, the average retail electricity floor price increased by 13.69 percent to VND1,826.22 (US$0.078) per kWh, and the average retail electricity ceiling price increased by 28.2 percent to VND2,444.09 (US$0.10) per kWh. Adjustments in electricity retail price brackets were based on 2022 electricity production and business costs. Unchanged retail electricity prices could lead to VND64.9 trillion (US$2.75 billion) in losses for state power company Vietnam Electricity (EVN), Vietnam’s sole power distributor, in 2023 due to increasing input and production costs.
According to the chairman of the Vietnam Valuation Association Nguyen Tien Thoa, the global price of coal increased sixfold in 2022 due to the ongoing conflict between Russia and Ukraine. The last major price adjustment for retail electricity prices was in March 2019 as the government has sought to mitigate inflationary pressures. Previously, the average electricity retail price was VND1,864.44 per kWh (US$0.08 per kWh).
EVN had previously proposed to increase retail prices by approximately 10 percent to stabilize its finances. In 2023, Vietnam is expected to launch a competitive retail electricity market to improve transparency and efficiency in the power sector. New retail electricity prices have yet to be announced by EVN. The adjusted retail electricity price bracket paves the way for EVN to set new retail power prices, reflecting its higher input costs.
Opportunity for greater private investment
By increasing the electricity retail price brackets to be closer to the market value, the government hopes to encourage greater private investment in the electricity industry. Following these recent price bracket increases, Vietnam’s retail price of electricity is expected to continue to be relatively low in the region, remaining below the average electricity prices in Cambodia, the Philippines, Singapore, and Thailand.
