Vietnam’s Ministry of Industry and Trade has proposed new electricity pricing mechanisms that could allow state utility Electricity of Vietnam, or EVN, to gradually recover nearly VND45 trillion (USD1.73 billion) in accumulated losses through future retail power price adjustments.

The proposal appears in a draft amendment to the Electricity Law submitted by the ministry to the Ministry of Justice for appraisal.

One of the most significant additions in the draft concerns how electricity retail prices would be adjusted in response to changing production and supply costs.

According to the proposal, retail electricity prices would be revised in a timely manner based on fluctuations in input costs while ensuring the recovery of reasonable and valid expenses, alongside appropriate profits aimed at preserving and developing enterprise capital.

The draft also states that if legitimate costs related to electricity production and supply are not fully recovered during a pricing cycle, they may be carried forward and allocated into future electricity retail price adjustments.

Authorities said the mechanism is intended to improve financial transparency and provide a clearer legal basis for costs incurred by electricity suppliers, particularly those arising from factors beyond their control.

Retail electricity providers would also be required to publicly disclose the cost components used in calculating average retail prices.

These would include expenses linked to power generation, transmission, distribution, system operation, ancillary services and broader sector management, as well as major input factors affecting electricity prices.

The ministry said EVN’s financial difficulties stem largely from the sharp rise in global fuel prices during 2022 and 2023.

Electricity prices remained frozen in 2022 despite soaring coal and gas costs triggered by the Russia-Ukraine conflict, as Vietnam sought to reduce economic pressure following the Covid-19 pandemic.

Although power tariffs were adjusted in 2023, authorities described the increases as cautious because of concerns over macroeconomic stability and social welfare.

As a result, EVN was unable to fully recover mounting production costs during that period.

According to EVN data cited in the draft, the group accumulated losses of around VND50.029 trillion, equivalent to roughly USD1.92 billion, across 2022 and 2023.

By the end of 2024, improved business performance had reduced the parent company’s accumulated losses to around VND44.792 trillion, or approximately USD1.72 billion.

The ministry said the draft amendment would create legal conditions for electricity enterprises to recover reasonable and legitimate costs while maintaining stable operations and investment capacity.

Officials added that any inclusion of unrecovered costs into future electricity pricing plans would be considered either fully or partially depending on actual economic conditions.

Electricity price adjustments, they said, would continue to be implemented gradually in order to avoid sudden economic or social disruptions.

Authorities stressed that power pricing has consistently been managed with careful consideration of political stability, social welfare and consumer interests.

For that reason, retail electricity prices are typically adjusted in relatively small increments to balance the interests of electricity suppliers and customers.

The ministry also noted that in periods of favourable hydrological conditions, pressure on electricity pricing may ease due to lower generation costs from hydropower sources.

The proposal comes amid ongoing scrutiny of EVN’s financial health and Vietnam’s broader energy transition, as the country faces rising electricity demand alongside growing investment needs in power infrastructure.

Separately, EVN recently reported that its business performance improved significantly during 2024 and 2025, with accumulated losses expected to narrow sharply to around VND5.611 trillion, or approximately USD216 million, by the end of 2025.

Tam An