Gov’t power subsidies should be replaced by price ceiling: EVN
How have the Government’s policies on developing electricity in rural areas been carried out?
Since 1997, under Decree 19, Electricity of Viet Nam (EVN) has built up its own regulations on directly managing the rural power network and applying a ceiling to power prices in rural areas. EVN has also co-operated with other ministries and sectors to plan further investment in rural power, if it gets Government approval. Investment will be financed by EVN, the Government and local authorities.
EVN has also begun acquiring electricity networks from smaller operators in towns and rural areas. The take-overs aim to create a sustainable State-owned power grid, accessible by all.
Electricity, however, has not reached many rural areas, while people in other rural areas are paying too much for power. Is this true that the Government’s policies are not being carried out effectively?
There are 8,838 communes out of the total 9,087 that have electricity, or around 97.3 per cent, and more than 94 per cent of the 14,158 million rural families have electricity. Nearly 57 per cent of the communes which are power-connected buy electricity from non-State owned intermediary sources. Some of those pass on electricity to farmers at well above market rates and above the ceiling price, so those rural families do not benefit from State policies.
The Government has issued Circular 97, introducing the Government’s policies to help develop power in rural areas. Are these policies helping solve those problems?
There are only 249 communes not covered by the State-owned electricity network. They are all in remote areas, mostly mountains and islands, and use local electricity providers. Government policies help with investment in providing power infrastructure to those locations, and are a great help to businesses, if they are carried out effectively. Policies would help with the problem of a shortage in investment capital to develop the electricity network in rural and distant areas.
Another problem is that rural households pay more than urban ones for electricity, How is this problem being dealt with?
EVN wants to apply electricity prices on a nation-wide scale and make one price for both rural and urban areas. We cannot continue supporting private power companies in rural areas, as this gives those producers the opportunity to overcharge.
Electricity prices are expected to rise soon. How will EVN help ease the difficulties of farmers while raising prices?
Retail power prices will be adjusted until 2010 based on the market situation, and the Government subsidy to power producers will gradually be eliminated.
The facts show that farmers and households in rural areas do not profit from the Government’s preferential price policy. To make the most of this, a lot of power producers have established power stations in rural areas to benefit from the Government’s preferential whole sale price of 390 dong per kWh. Under the law of electricity, the retail power price for rural areas on fixed time contracts is set by electricity providers and approved by State-authorised companies.
Therefore, the government should set-up a framework for power prices and stop subsidising prices indiscriminately. If that works well, rural households would get electricity at reasonable prices.
