Hanoi (VNA) - The Ministry of Industryand Trade (MoIT) is drafting regulations on new retail prices for electricity,aiming to lower electricity prices for hotels in order to strengthen thetourism sector and hike prices for electricity-guzzling households in an effortto incentivise lower consumption.

The draft states that electricity retail priceswould be set for each customer category including producers, businesses,lodging facilities, administrative agencies, and households. The averageelectricity price is currently 1,662 VND per kWh.

A new feature of the draft regulations is discountedelectricity prices for lodging facilities as the Government aims to helptourism become one of the country’s key economic sectors. Accordingly, lodgingfacilities will enjoy a lower power tariff equal to power for producers.

The retail price for households is still dividedinto six groups. Families who consume up to 50 kWh of electricity per monthwould pay 92 percent of the average retail price. Those using from 51 to 110kWh will pay 95 percent of the price, 101-200 kWh 110 percent, 201-300 kWh138 percent, 301-400 kWh 154 percent, and over 401 kWh 159 percent.

The Government will subsidise poor households withan amount equal to the retail price of 30 kWh per month.

The pricing scheme means that the more electricityhouseholds consume, the more money they have to pay: households that consumeover 401 kWh per month would have to pay a price 1.7 times higher than that ofhouseholds that consume 50 kWh per month.

The ministry said the move was intended to encouragehousehold customers to save electricity.

The power tariffs were drafted after the ministryconsidered the experiences of countries such as Thailand, the Republic of Korea, HongKong, South Africa, Indonesia and Malaysia. The establishment of six groups forelectricity pricing over the past three years has been straightforward andeffective at encouraging responsible power use, the ministry added.

However, the division of power tariffs forhouseholds into six groups has not been responsive to societal changes, expertssaid.

Nguyen Tien Thoa, former director of the PriceManagement Department under the Ministry of Finance, told online newspapervietnamnet.vn that currently, few poor households consume less than 50 kWh.People’s lifestyles now include dramatically more electronics equipment.

Thỏa proposed applying a common electricity pricefor households or reducing the current six groups to three or four.

Statistics showed that around 65 percent ofhouseholds consume electricity of 150 kWh a month.

“We proposed households consuming less than 150 kWha month pay 95.5 percent of the average retail price instead of the current110 percent, to ensure most of people enjoying lower power tariff,” he toldthe newspaper.

Specialist Ngo Tri Long shared the opinion, sayingthat the people’s quality of life has been improved as electricity use hasincreased. He said the Government should not apply a higher-than-average priceto people consuming more than 100 kWh per month.

In July, the Government issued a new mechanismstipulated in the Prime Minister’s Decision 24/2017/QD-TTg allowing theElectricity of Vietnam (EVN) to hike the average power retail price when inputcost for electricity production rises 3 percent instead of 7 percent asbefore.

Depending on the input cost increase, EVN willdecide to raise the price between 3 and 5 percent before reporting to theministries of industry and trade and finance.

For increases between 5 and 10 percent, EVN canraise prices after receiving approval from the MoIT.

For hikes above 10 percent, which could potentiallyimpact the macro-economy, the two ministries will work together to look intothe power price plan presented by EVN.

The average power retail price has remainedunchanged since March 2015. -VNA