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Consumers fight power price hike

January 13, 2009

The Ministry of Industry and Trade (MIT) has asked the Government to increase electricity prices between 8.3 and 9.8 per cent in the first quarter of this year.

Electricity workers install public lighting system on Tran Khat Chan Street in Ha Noi.

However, many businesspeople, economic experts and residential consumers said that if the Government was trying to hold-off recession, the move should be more carefully considered.

Nguyen Chi Nguyen, Deputy Chairman of the HCM City Food and Foodstuff Association, said an increase in power prices would cause the prices for many goods to rise.

Deputy General Director of Viet Nam Textile and Garment Association, Nguyen Son, said the sector last year could not reach its export growth target of US$9.5 billion because the export market had narrowed.

“Many textile and garment enterprises in HCM City and Binh Duong Province have had to sack thousands of workers. If power prices increase, enterprises will use less electricity and production will slow down, so how can the electricity sector maintain its income source?”

Agreeing with this viewpoint, Phan Xuan Hong, General Director of Sai Gon 3 Garment Corporation, said the textile and garment sector now urgently needed the State’s help to survive and maintain jobs.

He said the best solution would be for the Government to defer power-price increases until the second or the third quarter.

Householders worried about possible price rises include, Nguyen Thi Ngoc Hien, living in Ho Van Tu Street, Thu Duc District, HCM City.

She said: “Residents’ income are generally lower compared to those of 2007-08. If electricity prices increase 5 or 10 per cent, this will be bad enough, but when goods and services also rise, things will be more difficult.”

Economists also disagree with the ministry’s plans. Dr Le Dang Doanh, former head of the Central Institute for Economic Management, said that increasing electricity prices at present went against attempts to lower petrol and gas prices.

“The ministry should collect opinions from experts, scientists, managers and the people to assure that the rise is necessary,” he said.

Agreeing with this viewpoint, Dr Ngo Tri Long from the Finance Academy, said recently Electricity of Viet Nam (EVN) General Director Pham Le Thanh said the EVN must increase the electric price to attract investors.

“But actually, the EVN still makes profit, and its many costs can be reduced if their business can be reasonably restructured. EVN’s costs in many of its business stages are high, because of its management effectiveness is low, and the sector lacks competitiveness,” said Long.

Dr Nguyen Duc Thanh, Director of the Centre for Economy and Policy Study at Ha Noi National University, said power prices should not be raised for at least six months.

“We should not raise electricity prices now because of the possibility of inflation. If we are trying to stimulate demand, higher electricity prices will go against efforts to stimulate consumption and investment,” said Thanh.

In an effort to help enterprises save power, this year the State will earmark VND15 billion ($857,142) to support six experimental projects on how to cut down on usage in domestic situations.

(Viet Nam News)