ietnam mulls assistance for firms hit by new power prices

V

The Ministry of Industry and Trade said Friday the new peak hour power pricing policy will stand as announced The new peak hour power pricing policy will stand as announced, but the government may consider assisting enterprises seriously affected by the increase, says Bui Xuan Khu, Deputy Minister of Industry and Trade.

Khu told a press briefing in Hanoi Friday that the ministry would suggest solutions to the government after learning of the impacts of the pricing policy from affected enterprises this month. Commercial power users are currently charged double the normal rates during peak hours – between 9:30 a.m. and 11:30 a.m. and between 5 p.m. and 8 p.m. Before March 1, peak hour rates applied only to power used between 6 p.m. and 10 p.m. Many businesses have since protested the extension of peak hours, arguing it is unreasonable to be charged extra in the morning as it is a key production period. Khu said Vietnam is using much more electricity for production in the morning because of increasing demand from industrial and service sectors. Without measures to reduce power usage during peak hours, the national grid could collapse. He also advised firms to reduce unnecessary additional charges during peak hours or change working hours to mitigate policy impacts. In a note sent to the Ministry of Industry and Trade on March 19, the Vietnam Plastics Association said the production costs of members would increase by 8-10 percent under the new pricing policy. The association said that its members were already suffering a 30-40 percent decrease in output in the first two months of this year due to the global economic downturn, and the power price hike will aggravate matters further. “If the situation lasts for a long time, some firms will have to stop operations due to big losses, more people will lose their jobs, and this will contribute to social disorder,” the association cautioned. Vietnam’s power generation capacity is 7,000MW during low hours, and 11,500MW during peak hours. Average power prices have increased by 8.9 percent to VND948.5 (5 US cents) per kilowatt-hour under the new policy that took effect on March 1, 2009. Reported by Bao Van