In order to attract investments in developing power generation sources and grid networks, Việt Nam needs to implement a more market-based pricing mechanism for electricity. This was the key takeaway from an online conference held on the Government’s e-portal, where experts discussed the importance of creating breakthroughs in the energy sector through pricing reforms.
Nguyễn Tiến Thoả, former Director of the Price Management Department under the Ministry of Finance, highlighted the current challenges faced by the electricity industry in Việt Nam. He pointed out that the selling prices of electricity do not fully reflect the fluctuations in input costs for production, leading to estimated losses of VĐ47.5 trillion (US$1.9 billion) in 2022-23. This has created difficulties in terms of cash flow for investments in new generation sources and grids.
One of the main issues identified by Thoả is the conflicting goals of electricity pricing. On one hand, prices need to cover production costs to encourage investments, while on the other hand, they must be reasonable to ensure social security, energy security, and control inflation. This balancing act has made it challenging to harmonize all the goals of electricity pricing.
Bùi Xuân Hồi, an expert in energy economics, emphasized the importance of pricing in the energy sector. He explained that while each country may have a different approach to determining electricity prices, the goal is to cover all costs associated with the electricity system. Hồi suggested that Việt Nam needs to move towards a more market-based pricing structure, gradually phasing out cross-subsidies in electricity prices.
Hồi also highlighted the importance of base energy sources in the electricity structure, noting that prices are likely to continue rising as input costs, such as oil prices, increase. He warned that without improvements in electricity price management, Việt Nam Electricity (EVN) may continue to suffer losses, limiting resources for investing in generation sources and grid networks.
To address these challenges, National Assembly deputy Phan Đức Hiếu proposed several solutions. He stressed the need for transparent calculations of electricity production costs and the separation of government subsidies from actual electricity prices. Hiếu also called for enhanced competition in the electricity market and pricing mechanisms that encourage energy saving and efficient energy use.
From the perspective of an electricity company, Nguyễn Đình Tuấn, director of Sơn Đông Thermoelectricity Plant, emphasized the importance of policies to attract investments in clean and renewable energy. He highlighted the need for a smart grid, storage systems, and detailed regulations for direct power purchase agreements.
In conclusion, it is clear that a market-based pricing mechanism for electricity is crucial for attracting investments in the energy sector in Việt Nam. By implementing transparent and efficient pricing policies, the country can accelerate its green transition, attract investments, and move towards a carbon-neutral economy. Institutional reforms and a focus on energy efficiency will be key in achieving these goals and ensuring a sustainable energy future for Việt Nam.
