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Vietnam Raising Power Prices in 2009

The government of Vietnam has announced plans to phase out subsidies and raise electricity rates in order to make the sector more profitable and attract investment for new power plants, according to Agence France-Presse. The current state-set retail power prices are below cost, according to government officials, around 890 dong (US$0.05) per kilowatt hour. The increase could be as high as 20 percent in 2009, which is likely to create unrest due to the country's double-digit inflation rates. Power blackouts are common in the country, where demand is expected to rise by 16 percent per year through 2010 and then by 12 percent annually after that. The government has had to buy electricity from China in recent years to keep up with demand, and this has resulted in heavy sector losses. Most of the country's electricity generation has shifted recently from coal and hydropower to natural gas, and plans are to have the country's first nuclear power plant operational by 2020.

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