The average increase of 8.92% would not seriously affect production and poor families, said deputy prime minister Hoang Trung Hai at a press briefing in Hanoi Tuesday.

The Ministry of Industry and Trade officially announced the increase at the briefing, though news of the move was initially announced on the government website Saturday.

At the conference, Hai said the average retail electricity price would be dong 948.5 (5.4 US cents) per kilowatt-hour (kWh), excluding value-added tax, beginning in March. The current price is dong 860 (5 US cents) per kWh. Power for commercial purposes will cost more than for household use.

Deputy minister of Industry and Trade Do Huu Hao said at the press briefing the possible impacts of the increase on the economy and society had been carefully considered.

Hao said the increase of retail electricity prices wouldn't affect poor families because the government would continue offering them subsidised prices.

Poor households would have to pay between 35 and 40% of the new average retail prices if they used below 50 kWh per month, he said.

But he said poor households would have to pay only the price of producing the electricity if they used between 51 kWh and 100 kWh a month.

Up to 2.5 million poor households in Vietnam use less than 50 kWh of electricity per month, according to the Ministry of Industry and Trade.

Deputy minister Hao also said power prices may be adjusted every year from 2010 in accordance with input cost fluctuations.

"Retail electricity may either increase or decrease beginning next year," he said.

The finance ministry and the Ministry of Industry and Trade will have the authority to adjust the price by a maximum of five%, while only the prime minister can approve a greater increase or decrease.

Thanh Nien News - February 20, 2009