Decision No. 21/2009/QD-TTg on electricity sales prices for the year 2009 and the years 2010-2012 under the market mechanism

Pursuant to …;

ON ELECTRICITY PRICES FOR THE YEAR 2009 AND THE YEARS 2010-2012 UNDER MARKET MECHANISMS

PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;
Pursuant to the Electricity Law dated December 3, 2004; Decree No. 105/2005/NĐ-CP dated August 17, 2005 of the Government detailing and guiding the implementation of certain provisions of the Electricity Law;
Pursuant to the Price Ordinance dated April 26, 2002; Decree No. 170/2003/NĐ-CP dated December 25, 2003 of the Government detailing the implementation of certain provisions of the Price Ordinance; Decree No. 75/2008/NĐ-CP dated June 9, 2008 of the Government amending and supplementing some articles of Decree No. 170/2003/NĐ-CP dated December 25, 2003 of the Government detailing the implementation of certain provisions of the Price Ordinance;
Considering the proposal of the Minister of Industry and Trade,

Pursuant to …;

Article 1. Approves electricity prices for the year 2009 and the years 2010-2012 under market mechanisms with the following main contents:

1. From March 1, 2009, the average retail electricity price is 948.5 VND/kWh, excluding VAT (increased by 8.92% compared to the average electricity price in 2008).

2. From January 1, 2010, electricity prices will be implemented based on market prices.

Article 2. Approves principles for adjusting the structure of the retail electricity tariff schedule

1. In 2009:

a. Adjust the tiered tariff schedule for residential electricity consumption with the first tier ranging from 1 to 50 kWh. The price subsidy for the 1-50 kWh tier is 35-40% of the average electricity price in 2009. The electricity price for the 51-100 kWh tier equals the average cost, without profit.

b. The rate of increase in electricity prices for production should remain lower than the average rate of increase in electricity prices; the rate of increase in electricity prices for residential use should remain higher than the average rate of increase in electricity prices to gradually eliminate cross-subsidies from industrial electricity consumption to residential electricity consumption, and implement government policies to support electricity prices for low-income households and poor households.

c. Apply the tiered tariff schedule for residential electricity consumption in rural areas to all types of organizations engaged in retail electricity sales in rural areas to implement the government's policy of supporting electricity prices for low-income households and poor households. The wholesale electricity price for each tier in rural areas is equal to the retail price of that tier minus 25% to a maximum of 30% for power losses and legitimate costs for managing and operating the rural power grid.

d. Apply time-of-use (TOU) tariffs to high-voltage and medium-voltage customers and low-voltage customers in areas where technical conditions permit.

đ. Apply a unified national electricity price for all customer categories in regions connected to the national power grid.

2. Starting from 2010, study and supplement the following adjustments:

a. Apply two-part pricing consisting of capacity charges and energy charges to suitable customers where technical conditions permit.

b. Apply a price subsidy mechanism for poor households and low-income households with monthly electricity consumption of 50 kWh or less by directly deducting from their monthly electricity bills (where technical conditions permit). The electricity price for the 51-100 kWh tier remains at the average cost, without profit.

c. Gradually apply a ceiling price for retail electricity to production and service customers; allow power companies to sell electricity to customers at negotiated prices below the ceiling price set by the regulatory authority depending on the scale of usage. For residential electricity in areas connected to the national power grid, continue to apply the unified national price set by the State.

Article 3. Approves the mechanism for adjusting electricity prices according to market mechanisms

1. Annually, the Ministry of Industry and Trade, based on the production and business situation of the power industry and the general price level, shall coordinate with the Ministry of Finance to decide on the adjustment (increase or decrease) of electricity prices according to market mechanisms.

2. In cases where the average electricity price adjustment is increased (or decreased) by 5% or less compared to the approved average electricity price of the previous year, the Electricity Tariff Management Team (comprising the Electricity Regulatory Authority under the Ministry of Industry and Trade and the Price Management Department under the Ministry of Finance) shall review and submit to the Minister of Industry and Trade for approval. If there are differing opinions between ministries, the Minister of Industry and Trade shall decide on the price adjustment and bear responsibility before the Prime Minister.

3. In cases where the average electricity price adjustment is increased (or decreased) by more than 5% compared to the approved average electricity price of the previous year, the Ministry of Industry and Trade shall examine and submit, the Ministry of Finance shall review and report to the Prime Minister for approval; during the waiting period for the Prime Minister's decision, the Minister of Industry and Trade may approve an increase (or decrease) of up to 5% within the ceiling authorized by the Prime Minister.

Article 4. Retail electricity prices in rural areas:

1. From 2009, apply a uniform tiered tariff schedule for residential electricity consumption nationwide for areas supplied by the national power grid, regardless of the type of organization selling electricity in rural areas.

2. For organizations selling electricity in rural areas that do not yet have the conditions to sell electricity according to the tiered residential tariff schedule, temporarily apply the current rural electricity ceiling price of 700 VND/kWh; by September 1, 2009 at the latest, these units must switch to selling electricity according to the tiered retail price schedule as specified in Clause 1 of this Article. After this deadline, if organizations selling electricity in rural areas still lack the conditions to sell electricity according to the tiered price schedule, the People's Committee of the province shall instruct the transfer to Power Companies under the Vietnam Electricity Corporation (EVN) to take over, invest in upgrading, and ensure direct supply of electricity to rural residents.

3. Retail electricity prices in areas not yet connected to the national power grid shall be established by the electricity seller on the principle of ensuring business viability, and submitted to the provincial People's Committee for approval after obtaining the opinion of the Ministry of Industry and Trade.

Article 5. Implementation

1. Entrust the Ministry of Industry and Trade

a. To lead and coordinate with the Ministry of Finance to issue circulars stipulating and guiding the retail electricity tariff schedule for 2009 with an average retail price of 948.5 VND/kWh according to the principle of adjusting the structure of the retail electricity tariff schedule as provided in Article 2 of this Decision; wholesale electricity prices for rural areas, wholesale electricity prices for collective housing complexes, wholesale electricity prices for industrial zones, and guidance on implementing the 2009 retail tariff schedule.

b. Chair and coordinate with the Ministry of Finance to issue Circulars stipulating the implementation mechanism for building and adjusting electricity sales prices according to market mechanisms based on the principles approved in Article 3 of this Decision.

c. Develop regulations on the method of establishing, the procedures and formalities for reviewing and issuing electricity sales prices according to market mechanisms to be applied from January 1, 2010, and submit them to the Prime Minister for approval in the second quarter of 2009.

d. Issue targets for reducing electricity loss for subsequent years to apply in calculating electricity prices.

đ. Direct the electricity industry to implement measures to ensure cost savings and reduce electricity losses.

e. Organize propaganda and explanations regarding the policy of adjusting electricity prices so that enterprises and the public understand and agree with the government's policy.

2. The Minister of Industry and Trade shall direct the implementation in accordance with the provisions of this Decision based on the Electricity Law and other current legal documents.

3. The Ministry of Finance shall be responsible for coordinating with the Ministry of Industry and Trade to issue Circulars stipulating the implementation mechanism for building and adjusting electricity sales prices according to market mechanisms based on the principles approved in Article 3 of this Decision and perform state management functions related to electricity prices.

4. The Chairman of the People's Committee of the province shall direct and organize inspections and supervision of units selling electricity to rural households within their jurisdiction to implement the retail electricity price mechanism for rural areas as prescribed in Article 4 of this Decision.

Article 6. Effectiveness

This Decision takes effect from February 12, 2009.

Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairmen of the People's Committees of provinces and centrally governed cities, and relevant units are responsible for implementing this Decision.