Brian Jeffrey
Beginning May 10, Vietnam has increased its average retail electricity price by 4.8%, now standing at around VND 2,204.07 per kWh (excluding VAT), up from VND 2,103.12 per kWh.
There remains a notable difference in electricity prices across various customer segments. For instance, business customers face the highest charges at VND 5,422 per kWh, while manufacturing rates cap at VND 3,640 per kWh.
The new pricing structure released by the Ministry of Industry and Trade on May 9 shows substantial variation in electricity costs depending on user type.
Residential users experience a tiered pricing system with six levels: the lowest starts at VND 1,984 per kWh and the highest climbs to VND 3,460 per kWh.
Manufacturing electricity prices are categorized by voltage levels and usage times, including off-peak, normal, and peak hours. The most affordable manufacturing rate is VND 1,146 per kWh for off-peak times at voltages of 110 kV and above, which is VND 838 less than the lowest residential rate.
On the upper end, the peak manufacturing rate is VND 3,640 per kWh, which exceeds the highest residential rate by VND 180 but remains VND 1,782 lower than the peak business rate.
Business users pay the highest electricity rates overall. Commercial retail rates are categorized by voltage levels and fluctuate based on the time of use. The lowest business rate is VND 1,829 per kWh during off-peak hours at voltages ranging from 6 kV to 22 kV, which is VND 683 more than the minimum manufacturing rate and slightly below the lowest residential rate by VND 155.
The peak commercial rate of VND 5,422 per kWh is VND 1,962 higher than the highest residential rate and VND 1,782 greater than the peak manufacturing rate.
Overall, manufacturing electricity costs are considerably lower than those for residential and business usage, highlighting a governmental goal to support the industrial sector. However, this creates challenges under the current pricing system.
In a recent forum, former Price Management Department Director Nguyen Tien Thoa pointed out several inefficiencies in the electricity pricing approach, notably the absence of a market-driven model and overlapping policy goals.
Thoa criticized the persistent cross-subsidization within Vietnam’s electricity costs, where households and regions support each other financially through pricing gaps.
“This outdated system hinders the establishment of a genuine competitive pricing model for electricity,” he stated.
The power sector is currently facing financial issues as prices do not reflect actual production costs, leading to heavy subsidies that diminish investment potential within the industry.
Thoa cautioned that the power sector is consistently experiencing negative cash flow and struggling to maintain financial stability, which poses risks to Vietnam’s long-term energy security.
He advocated for a shift towards a clear, market-oriented pricing strategy that accurately factors in the costs of electricity while revamping the current pricing framework.
The updated Electricity Law, passed by the National Assembly last year, aims to gradually eliminate cross-subsidization among different customer categories not involved in the competitive retail electricity market and seeks to address regional pricing differences to align with market development levels.
