April 16, 2011 / 9:45 AM / 8 years ago

Vietnam to change electricity prices on market situation -govt

HANOI, April 16 (Reuters) - State utility Vietnam Electricity (EVN) will be allowed to change electricity prices up to four times a year from June 1, instead of fixing prices for a year at a time as is the current practice, the government said in a statement.

The Hanoi-based group may adjust prices based on market conditions at most once every three months, the government said on its news website (baodientu.chinhphu.vn), quoting a decision approved by Prime Minister Nguyen Tan Dung.

Industry analysts say the country’s heavily subsidised electricity prices are one of the key reasons behind a supply shortfall that leads to regular blackouts and is one of the top concerns for investors.

Vietnam raised the average electricity price by more than 15 percent at the start of March, a move that industry officials said aimed at reducing losses for EVN and making the sector more attractive for investors. [ID:nSGE71J001]

EVN will be able to move electricity prices if input costs or foreign exchange rates change, and if there are changes in the country’s electricity output, the statement said.

To raise prices by up to 5 percent it will need to ask the Ministry of Industry and Trade for permission. If it wants to increase prices by more than 5 percent EVN must also submit its plan to the Finance Ministry for approval, it said.

If input costs fall 5 percent or more EVN will cut electricity prices accordingly, the statement said.

The government said it will also use an electricity price stabilisation fund if necessary to prevent any impact on the macro-economy or social welfare. (Reporting by Ngo Thi Ngoc Chau; Editing by John Ruwitch)

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