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Electricity price increase will force GDP down: study (28/10)
06/08/2010 - 18 Lượt xem
According to Nguyen Duc Thanh, director of the centre and head of the team, the researchers considered three scenarios corresponding to the three price increases for the production consumption of 0%, 10% and 20%. All three scenarios showed the same result: the GDP will decrease and the consumer price index (CPI) will increase.
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The possible impacts of electricity price increases on GDP | |||
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Scenario 1 |
Household consumption: up by 20% |
GDP decrease: 0.04% |
CPI increase: 0.13% |
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Production consumption: 0% | |||
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Scenario 2 |
Household consumption: up by 20% |
GDP decrease: 0.15% |
CPI increase: 0.73% |
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Production consumption: up by 10% | |||
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Scenario 3 |
Household consumption: up by 20% |
GDP decrease: 0.16% |
CPI increase: 1.25% |
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Production consumption: up by 20% | |||
According to the research team, the Electricity of Vietnam (EVN) accounts for 74% of electricity output and holds 94% of the electricity transmission market – therefore, EVN controls the power market. EVN does not lack capital though it complains that it does and the profit it earns is not low. EVN still has money to inject in business fields that require significant sums of capital like telecommunications and finance.
The fact that the electricity output does not increase rapidly enough to satisfy the increasingly high demand and production expansion may originate from problems in management, but not from low electricity prices.
CEPR’s report has also pointed out that it would be unreasonable to push the electricity price up to the regional level, since many types of expenses in Vietnam prove to be lower than in other regional countries (labour cost, materials).
The research team affirmed that if productivity increased by 2%, Vietnam would not need to increase electricity prices, while it could even lower prices by 2%. Therefore, according to Dr Thanh, the thing Vietnam needs to do now is to improve supply instead of raising prices.
Nguyen Trung, a senior economist, also said that in principle, producers must not say they need to increase prices to cover production and business expenses. Trung said that before attempting to raise electricity prices, EVN should say what it has been doing to increase productivity.
Dr Nguyen Quang A, Head of the Institute for Development Studies, said that people do not see convincing proof that shows the necessity of raising electricity prices. “EVN needs to make public the figures about productivity and profit in recent years. In the long term, the electricity distribution unit needs to be split from EVN,” he added.
(Source: Tuoi tre)
