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Updated power pricing regulations in Vietnam officially kick-in today

As of today, electricity pricing in Vietnam will be reviewed quarterly, as opposed to annually, and allowed to be adjusted as needed by the state power provider, EVN. The state-owned enterprise and sole electricity retailer will be able to adjust prices by up to 3 percent before approval is needed, per Decision 5 issued back in March.

For context, in 2022 EVN reported a loss of US$1.5 billion with rises in fuel costs vastly outstripping the electricity retail price which is regulated. 

That said, Decision 24 issued back in 2017, the precursor to Decision 5, already had provisions for the electricity price to be adjusted annually, however, between 2019 and November 2023 no adjustment was made. It’s not clear why and in this context the frequency at which power prices are reviewed may not have been the crux of the problem.

Of note, last year, power shortages were estimated to have cost Vietnam’s economy an estimated US$1.4 billion. This was attributed to water shortages for hydropower and a lack of a sufficient supply of coal, however, under investment, particularly in power infrastructure, also played a role.

Of note, it’s estimated that Northern Vietnam’s electricity consumption could increase by as much as 17 percent this summer, however, the supply of electricity is estimated to have increased just 10 percent.

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