Vietnam Electricity Group (EVN) has just announced its decision to adjust the average retail electricity price from October 11 with an increase of 4.8%, to 2,103.11 VND/kWh.
Businesses have a "headache" because of increasing electricity prices
As a company operating in the field of aluminum profile production, on average, the total energy consumption of Do Thanh Aluminum Joint Stock Company is 1,817 TOE per year. Therefore, the increase in electricity price by 4.8% will certainly affect the production cost of the company.
At a time when the market is facing many difficulties, the increase in electricity costs will cause product prices to escalate, putting businesses in a difficult position. With the 4.8% increase in electricity prices, production costs will increase accordingly," said a representative of Do Thanh Aluminum Joint Stock Company.
According to the representative of this enterprise, orders are usually negotiated within 3-6 months; enterprises cannot easily increase product prices to retain customers. Therefore, minimizing costs, optimizing production processes, and using renewable energy are mandatory options.
To improve the use of energy economically and efficiently, the company has established an Energy Management Board with 5 members, including 1 energy manager certified by the Ministry of Industry and Trade, with an Energy Management Board organizational chart, defining the functions and tasks of the board members. Issue energy policies, annual and 5-year energy saving plans.
The company also invested in modernizing the production line, gradually eliminating outdated equipment such as aging kilns and lime kilns with more advanced energy-saving equipment, using composite skylights, expanding ventilation windows, installing ventilation fan systems, and setting lighting times according to usage needs.
Mr. Nguyen Van Ket - Director of SKD Vietnam Precision Mechanical Company said that the increase in electricity price was within the company's expectations as soon as there was information related to the losses of the electricity industry.
"Electricity prices account for about 20-30% of the cost structure of finished products. When electricity prices increase, costs will affect about 5% of product costs, which is acceptable," said Mr. Ket, adding that the company itself is making more efforts to improve production technology and save electricity.
Mr. Nguyen Dung - owner of a passenger transport company in Hanoi said that although the company had made provisions for an increase in electricity prices, it was still quite surprised by the news that retail electricity prices would increase by 4.8%.
"EVN needs to have a clear roadmap for price increases so that businesses can be proactive in their production and export plans. This sudden price increase makes it very difficult for businesses to cope," said Mr. Dung.
According to the Vietnam Textile and Apparel Association, businesses are aware that increasing electricity prices is inevitable due to input pressure from electricity production. However, the increase at this time is also a challenge and difficulty for businesses due to great competition in the market, shortage of orders and only recovering at the end of this year.
To adapt to increasing production costs, including electricity prices, the textile industry itself has set out solutions for development goals, in which businesses use solar power (rooftop power).
"Currently, some enterprises such as May 10, Viet Tien... have invested in rooftop solar panels to reduce difficulties in electricity costs. From the challenge of increasing electricity prices, enterprises in the textile and garment industry must also calculate and tighten investment in costs to balance costs and ensure competitiveness with enterprises in the region," said the Vietnam Textile and Apparel Association.
Reasons for electricity price increase
Explaining the increase in retail electricity prices, EVN representative said that in reality, the cost of electricity production is affected by many input factors regarding electricity output, coal, oil, gas prices, foreign exchange rates, etc., in which, the source structure fluctuates in an unfavorable direction when sources of electricity purchase with low prices decrease, sources of electricity purchase with expensive prices increase compared to 2022.
According to EVN, although the prices of coal and gas fuels in 2023 will decrease compared to 2022, they will still be high compared to the period 2020-2021.
The 2023 blended coal price of Vietnam National Coal - Mineral Industries Group and Dong Bac Corporation supplied to thermal power plants is still maintained at a high level, 29% to 35% higher (depending on the type of coal) compared to the blended coal price applied in 2021.
"EVN has harmoniously balanced social security factors, reduced the impact on people's lives and the economy, so it decided to increase by 4.8%," said Mr. Nguyen Xuan Nam - Deputy General Director of EVN.
