Vietnam mulls raising prices

HANOI, VIETNAM - Vietnam will likely raise retail electricity prices by up to 10 percent this year to attract more investment in the energy sector, which is struggling to meet booming demand, state media reported.

Vietnam's electricity prices are much lower than those elsewhere in the region, making it less attractive to potential investors, the Vietnam Economic Times quoted Vice Minister of Industry and Trade Do Huu Hao as saying.

The ministry recommended the price increase last month, but it will not take effect unless it is approved by Prime Minister Nguyen Tan Dung, who is expected to act on the request soon.

Vietnam charges households 862 dong (4.9 U.S. cents) per kilowatt hour, while manufacturers pay 900 dong (5.2 cents). Thailand, Singapore, Indonesia and Malaysia charge from 14 cents to 15 cents, according to Electricity of Vietnam or EVN, the country's power company.

In neighboring China, the top price is 7.5 cents per kilowatt hour.

Vietnam's demand for power is expected to grow by 16 percent a year until 2015, according to government projections, and the country's booming economy has made it difficult for supply to keep pace with demand.

Vietnam's economy grew 8.5 percent in 2007 and 6.2 percent last year, despite the global economic slowdown. Its growth rate is among the fastest in Asia.

More than 500,000 families who use less than 50 kilowatts per hour a month will not be affected by the price increase because of government subsidies, Hao said.