An increase in electricity prices may put upward pressure on inflation, but may also help the Southeast Asian country attract private investment to develop the additional power plants that are needed to support its fast-growing economy.

The price hike took effect on Wednesday, the ministry said in a statement. Electricity prices in Vietnam are controlled by the government.

The ministry also said Vietnam’s inflation this year will still be kept below 4 percent as targeted by the National Assembly, the country’s lawmaking body, despite the price hike.

Vietnam has been struggling to develop its energy industry due to a lack of state funds. The country’s hydropower potential has almost been fully exploited, oil and gas reserves are running low, and in the last few years it went from a net exporter to net importer of coal.

The World Bank said in November that Vietnam needs to raise up to $150 billion by 2030 to develop its energy sector, adding that the country should allow private investors to play a “more prominent role in power sector financing”.

The government’s General Statistics Office is scheduled to release first-quarter inflation data on Friday next week. In February, the consumer price index rose 2.64 percent from a year earlier.

By Khanh Vu - Reuters - March 20, 2019