Vietnam approves lower power price hike for 2007
HANOI - The Vietnam government has agreed on a plan to raise power prices by 7.6 percent from January, instead of a 8.8 percent hike, as a way to lure more investors, a government report said on Saturday.
From January 2007, the average electricity price will be raised by 7.6 percent to 842 dong (5.2 U.S. cents) per kilowatt-hour, the report on the government's Web site (www.vietnam.gov.vn) said.
"The electricity price adjustment is aimed at raising cost-attractiveness and improving the investment climate of the electricity sector to attract investors, especially foreign investors," it quoted Industry Minister Hoang Trung Hai as saying.
Hai told a cabinet meeting on Friday that the price hike would also help offset the rising cost of inputs.
Earlier, the Finance Ministry had sought to raise the average power price by 8.8 percent, saying the hike would bring an extra 1.5 trillion dong next year to the energy sector which needs funds for power plants to fuel economic growth.
Prime Minister Nguyen Tan Dung told the Friday meeting that Vietnam's economy will grow 8.2 percent this year, above the annual target of 8 percent.
The National Assembly has set the 2007 economic growth target at 8.2 percent to 8.5 percent.
On Friday, the government also approved a roadmap of power prices until 2010, under which the average price will rise 5.5 percent to 888.3 dong from July 1, 2008.
In 2010, the price will be in line with the cost of power generation, the government report said, without giving a specific date.
Power demand, triggered by robust economic expansion, is forecast to grow up to 17 percent per year, driving the government to plan 60 additional plants by 2020.
The fast-growing sector has drawn more interest from foreign firms, and foreign investment has picked up significantly in the past year since the government announced plans to liberalise the sector gradually and raise retail prices.
Foreign investment commitments are expected to reach a record $9 billion this year. Government officials said they expected more to come when the Southeast Asian country becomes a member of the World Trade Organisation later this month.
In November, AES Transpower, a unit of AES Corp. of the United States, signed a contract to invest $1.4 billion in a coal-fired power plant in northern Vietnam.
Last year, Electricite de France opened a $400-million gas-fired plant in the southern province of Ba Ria-Vung Tau. ($1=16,062 dong)
Reuters - December 2, 2006.
|