Source: AFP
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| An electricity price hike in Vietnam follows an 18 percent increase in petrol prices last week. |
Vietnam on Tuesday raised electricity prices by 15 percent as data showed the country’s inflation soared further in February.
“The decision to raise the price of electricity immediately entered into force this Tuesday, March 1,” an official from the Ministry of Industry and Trade told AFP. He declined to be identified.
The electricity price hike follows an 18 percent increase in petrol prices last week, a move widely expected after Vietnam devalued its currency in February for the fourth time since late 2009, pushing up the cost of imported fuel.
Inflation reached 12.31 percent year-on-year last month, according to official data released Tuesday. The figure is far higher than Vietnam’s neighbors and has accelerated every month since August 2010.
An increase in power prices was needed “to mobilize investment for new power plants to meet the country’s burgeoning power demands,” the official Vietnam News earlier quoted Ta Van Hung, head of the energy department at the Ministry of Industry and Trade, as saying.
Electricity prices in Vietnam are lower than those in other countries in the region, while demand for power is expected to increase by at least 16 percent in 2011, the government says.
The European Chamber of Commerce in Vietnam (Eurocham) has cited estimates that Vietnam needs $40 billion-$50 billion worth of investment in energy infrastructure over the next five to 10 years.
Vietnam draws more than one-third of its electricity from hydropower, which leaves the system vulnerable to droughts, leading to blackouts.
Pledging that fighting inflation is its top priority, the government has unveiled a series of measures to rein in prices and stabilize the economy, which is facing a complicated mix of challenges. These include a struggling currency and a trade deficit that reached an estimated $12.4 billion last year.
Among the measures, Prime Minister Nguyen Tan Dung vowed to cut state spending by 10 percent in an effort to control prices.
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