VietNamNet Bridge - The 7.5 percent price increase in electricity prices, starting from March 16, will cost small businesses hundreds of millions of dong and big businesses billions of dong a month.

 

 

Nguyen Xuan Duong, chair of the Hung Yen Garment JSC, said the hike would lead to a 1 percent increase in the production cost and could have a negative impact on production.

“We will not only suffer from the price increase, but also price increases of other goods and services caused by the new electricity hike,” he said.

Duong said he was considering raising salaries for his workers, who have to spend more money on household electricity, in order to retain them.

Ta Van Cau from Cau Ly food processing private enterprise in Hanoi said he has to pay VND10 million a month on average on his small production workshop alone.

“With the price increase, I would have to pay hundreds of thousands of dong a month more, which is really a burden on a household-run business like ours,” he said. 

The director of a steel company said he was “envious” of garment companies, whose expenses for electricity just account for 1.5 percent of total expenses. 

As steel mills consume much electricity, steel companies foresee that expenses on electricity would increase by several billion dong a month.

At present, steel mills need 400 kwh to make one ton of ingot steel in accordance with electric arc technology and 600 kwh if using induction technology. 

As such, with the electricity price increasing by 7.5 percent, they would need 30-45 kwh of electricity more to create one ton of ingot steel.

Nguyen Van Sua, deputy chair of the Vietnam Steel Association, said steel companies are now experiencing the toughest-ever days.

“As the real estate market cools down, the demand for steel has decreased,” he said. “Vietnamese manufacturers have to compete fiercely with Russian and Chinese imports. And the electricity price hike will force them to pay billions of dong more every month.”

The Central Institute of Economic Management (CIEM) said the approved 7.5 percent price increase was lower than the proposed 9.5 percent, but is “still relatively high”.

The director of a brewery company said that the electricity price hike will have a double impact, because businesses will not only have higher electricity bills, but also will have to pay more for other goods and services affected by the new price hike.

To Quoc