Decision No. 276/2006/QD-TTg on electricity selling prices

Pursuant to …;

On electricity sales prices

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PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Electricity Law on 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 on 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;

Considering the proposal of the Minister of Industry.

Pursuant to …;

Article 1. Approves the roadmap for adjusting electricity prices for the period 2007-2010:

a) As of January 1, 2007, the average retail price of electricity is 842 VND/kWh.

b) As of July 1, 2008, the average retail price of electricity is 890 VND/kWh.

c) Starting from 2010, the retail price of electricity will be implemented based on market prices.

Article 2. Approves the plan to adjust electricity prices in 2007 ensuring the following principles:

- The State continues to support electricity users who are poor, low-income individuals, and households living in rural areas (currently accounting for 80% of the national population);

- The roadmap for adjusting electricity prices must ensure that the policy of gradually eliminating subsidies through electricity prices for production is implemented step by step, while also ensuring that enterprises accurately and fully account for production costs, transparency in economic accounting, including enterprises engaged in electricity production and business;

- Electricity prices must encourage the efficient and economical use of electricity in both production and daily life.

Article 3. Retail electricity prices as of January 1, 2007:

a) The tariff for retail electricity for the specified groups as set out in the Appendix attached to this Decision;

The electricity prices stipulated in the Appendix attached to this Decision do not include value-added tax;

b) The ceiling price for retail electricity for rural residential use is 700 VND/kWh;

c) The price range for retail electricity sold directly by independent power producers to agreed-upon entities shall not exceed ± 25% compared to the electricity prices prescribed in the Appendix attached to this Decision.

Article 4. Enterprises engaged in electricity production and business must proactively apply measures to improve labor productivity, service quality, and strive to reduce management costs and electricity losses so that from now until 2010, the entire electricity industry achieves cost savings of 3% to 4% per year (excluding depreciation of assets) and the total system loss rate decreases to 8% by 2010.

Electricity users, primarily businesses, must proactively implement appropriate measures to use electricity efficiently, especially during peak hours, contributing to the effective implementation of the Government's policy on the economical and efficient use of electricity.

Article 5. Implementation

1. The Ministry of Industry is responsible for:

a) Coordinating with the Ministry of Finance to guide the implementation of the retail electricity prices as prescribed in Article 3 of this Decision;

b) Setting wholesale electricity prices for rural areas and wholesale electricity prices for collective housing and community clusters in accordance with the principles stipulated in Article 2 of this Decision;

c) Coordinating with the Ministry of Finance and provincial People's Committees to direct the sale of retail electricity in rural areas according to the ceiling price for rural residential electricity as prescribed in this Decision;

d) Drafting and submitting to the Prime Minister the plan for retail electricity prices as prescribed in Clause b of Article 1 of this Decision (average retail price of electricity at 890 VND/kWh as of July 1, 2008) in the first quarter of 2008;

đ) Drafting and submitting to the Prime Minister the mechanism for adjusting retail electricity prices to ensure that from 2010, retail electricity prices are implemented based on market principles;

e) Directing the electricity sector to implement measures to ensure cost savings and reduction of electricity losses to achieve the targets set forth in Article 4 of this Decision;

g) The revenue difference obtained from increased electricity prices shall be used for investment in electricity development.

2. The Ministry of Finance is responsible for coordinating with the Ministry of Industry and relevant agencies to assess the impact of electricity price adjustments on production and daily life, proactively implementing price control measures within its authority, and simultaneously reporting and proposing to the Prime Minister necessary measures to ensure market stability.

3. The Chairman of the Provincial People's Committee directs and supervises electricity selling units and organizations to households in rural areas within their jurisdiction to comply with the ceiling price for rural residential electricity as prescribed in this Decision.

Article 6. Effectiveness

This Decision takes effect from January 1, 2007.

Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairmen of provincial and centrally-run city People's Committees, electricity selling units nationwide, and related units are responsible for implementing this Decision./.