As with every past electricity price hike, the same question resurfaces: who will shoulder the financial burden – the government, businesses, or the people?

EVN and the VND 44.8 trillion deficit

Between 2022 and 2023, global fuel prices soared due to geopolitical instability. Coupled with rising power purchase costs, this led EVN to incur losses of approximately VND 50 trillion. Despite cost-cutting and restructuring efforts, by the end of 2024, the parent company EVN still carried a deficit exceeding VND 44.8 trillion. The group argues this loss erodes state capital, violating the principle of safeguarding public investment.

EVN has requested to classify this loss as a legitimate cost under the Electricity Law, to be reflected in the average retail electricity price. Additionally, they propose that exchange rate differences and deferred supply costs also be included. In plain terms, consumers would gradually pay for previous financial shortfalls.

Why is EVN incurring losses?

A basic principle of market economics is to sell at a higher price than purchase costs. However, for many years, EVN has operated in reverse: while coal, gas, and imported oil prices have surged, retail electricity prices have been kept low due to administrative regulation.

The favorable FIT (feed-in tariff) pricing for renewable energy, while intended to encourage green investment, has turned into a financial burden for EVN. The group also struggles with high receivables, cash flow constraints, heavy loan obligations, and a bloated bureaucracy, all while maintaining supply to remote areas without mechanisms to recoup costs. Exchange rate fluctuations have further inflated import and foreign debt repayment costs by tens of trillions of dong.

In short, EVN’s losses stem not only from internal inefficiencies but also from a rigid pricing mechanism that both depletes state capital and discourages new investment. The central question remains: when will electricity prices be allowed to follow true market principles?

EVN’s argument – and lingering doubts

Under the Electricity Law, retail electricity prices must reflect full and reasonable costs and include a margin for reinvestment. The Ministry of Industry and Trade has acknowledged the need to revise Decree 72/2025 to make price adjustments more timely and transparent.

Still, incorporating past losses into future electricity prices raises fairness concerns. Should today’s consumers and businesses pay for outdated risks and past errors?

In a true market economy, businesses bear their own commercial risks. If every loss is socialized, what incentive remains for EVN to reduce costs, improve management, or operate transparently?

Electricity remains a "natural monopoly" – consumers have no alternative to EVN and its subsidiaries. This is why the government has always treaded cautiously when adjusting electricity prices. The Prime Minister has emphasized that Vietnam lacks a truly competitive electricity market, and that electricity pricing must balance the interests of businesses, citizens, and the broader economy.

Without independent oversight or a competitive market to validate pricing, applying a “cost-reflective” principle alone risks enabling monopolistic abuse – a concern that must not be underestimated.

There’s no denying EVN’s critical role in ensuring national energy security. The group invests hundreds of trillions of dong annually in grid infrastructure, contributes VND 23,000–24,000 billion in taxes, and allocates over VND 1,200 billion to social welfare. However, a loss of nearly VND 45 trillion cannot be solved by a single electricity price hike.

Toward a smarter cost-sharing mechanism

Rather than transferring all losses into electricity prices, several solutions could be considered:

First, transparency in costs: publish audited financials and clearly distinguish losses caused by external factors such as high purchase costs or exchange rate volatility from those stemming from poor management.

If the government agrees with EVN’s proposal, it should consider spreading the adjustment over 3 to 5 years instead of implementing it all at once to avoid inflation shocks.

Second, fiscal support policies: the state could defer accounting timelines or offer concessional loans to reduce pressure on electricity prices.

Third, protecting vulnerable groups: expand the 0–50 kWh pricing tier or implement subsidized bills for poor and near-poor households.

In the long run, EVN must reform its management practices, and the government should gradually establish a competitive electricity market.

Electricity is the lifeblood of the economy, but prices should not become a dumping ground for financial mismanagement. People will only accept paying more if they believe their money is being invested in infrastructure and energy security, not to offset management failures.

It is time to go beyond simply talking about “accurate and sufficient pricing.” What matters more now is transparency and accountability in managing the electricity sector – a sector that is both a natural monopoly and a backbone of the national economy.

Tu Giang