Vietnam's state-owned utility EVN has raised average retail electricity prices to help cushion increases in power generation cost.
EVN has increased the average electricity price by 4.8pc to 2,103.12 Vietnamese dong/kWh ($0.085/kWh), excluding value-added tax. The price rise was effective from 11 October.
The price increase is aimed at partly offsetting the increase in power generation, transmission, distribution and management costs at EVN, potentially giving the utility some headroom to absorb the recent increase in imported coal prices. Electricity production and business costs rose by 2.8pc on the year to VND2,088.90/kWh in 2023, EVN said.
The increase in power tariffs comes after a Vietnamese federal government order signed in March that gave EVN some freedom to raise prices by up to 5pc from current average retail prices, although the utility has to inform the ministry of industry and trade about the decision. The policy to liberalise retail electricity pricing came as the southeast Asian country continued to ramp up imports to boost generation and meet rising power demand.
The country has imported 49.97mn t of all types of coal in the first nine months of the year, up from 37.77mn t in the same period a year earlier, customs data show. Vietnam could end up importing close to 67mn t of coal this year at the current average rate of 5.55mn t/month, according to Argus calculations, up from 51.16mn t in 2023 and marking the country's highest annual imports since the 55mn t of coal it received in 2020.
The price increase could help Vietnam adapt to the recent uptick in the seaborne coal market. Argus assessed the GAR 4,200 kcal/kg coal market for Supramax cargoes at $52.07/t fob Kalimantan on 11 October, with prices recovering from a 40-month low on 30 August. The Australian NAR 5,500 kcal/kg coal was marked at $90.94/t fob Newcastle on 11 October, rising from $86.66/t on 30 August.
Loss-making utility EVN would likely continue to adjust electricity prices every three months. Credit rating agency Fitch in August expected average electricity prices to increase by 4.2pc to VND2,036/kWh in 2024 and by 2pc each year in 2025 and 2026. But EVN said poor households would be insulated from the impact of the price increase through power subsidies. EVN had raised electricity tariffs twice in 2023, when it reported a net loss of VND21.8 trillion in 2023, narrower than the anticipated VND64.9 trillion loss.
