The proposed adjustment comes against a backdrop of rapid inflation in energy costs. Since May 2023, Vietnam has implemented four upward adjustments to the average retail electricity price. The first occurred in May 2023, raising the price by 3% to 1,920.37 VND/kWh. This was followed by a 4.5% increase in November 2023 to 2,006.79 VND/kWh. The upward trend continued in October 2024 with a 4.8% hike to 2,103.12 VND/kWh, and was most recently matched in May 2025, when prices rose another 4.8% to the current level of 2,204.07 VND/kWh (excluding VAT). Consequently, the average price has increased by roughly 340 VND/kWh, representing a cumulative rise of more than 18% from the pre-May 2023 baseline of 1,864.44 VND/kWh.
Under the government’s guidelines, a 2% reduction from the current rate of 2,204.07 VND/kWh would lower the tariff by approximately 44 VND/kWh, bringing the average price down to nearly 2,160 VND/kWh. While the specific magnitude of the cut will depend on the final cost review and the plan submitted by EVN to the Ministry of Industry and Trade, legal frameworks support such a move. According to Decree 72, as amended by Government Decree 278, if the calculated average retail electricity price decreases by 1% or more, an adjustment is permitted, provided the new rate remains within the range stipulated by the Prime Minister’s Decision 07 (1,826.2 to 2,444.09 VND/kWh).
The feasibility of this reduction is rooted in EVN’s internal financial data. A recent report by EVN indicates that the total cost of electricity production and business operations in 2025 is projected at VND 601,680.1 billion (approximately $23.28 billion), equivalent to 2,092.7 VND/kWh. This figure is approximately 111.37 VND/kWh, or 5.32%, lower than the current average retail price. Furthermore, EVN’s financial performance for the first six months of 2026 shows positive improvements, with undistributed after-tax profits exceeding 3,000 billion VND by the end of June. Dr. Nguyen Huy Hoach, an energy expert from the Vietnam Energy Magazine, noted that these improved business results create room for short-term price reductions, which are practical requirements for controlling inflation and reducing input costs for the economy.
However, the path to a price cut is not without complexity. The cost structure reveals that electricity generation accounts for the vast majority of expenses. In 2025, generation costs are projected at VND 498,362.7 billion, or 1,733.35 VND/kWh, representing 82.8% of total costs. Distribution and retail costs follow at VND 78,993.21 billion (13.1%), while transmission costs account for VND 22,141.86 billion (3.7%). Because generation costs dominate the budget, factors such as fuel prices, power plant purchase prices, and the source mobilization structure are critical variables for EVN to review. Additionally, EVN reported VND 17,506.64 billion in costs not yet accounted for in the 2025 production and business figures, largely stemming from unrecognized exchange rate differences and payments to power plants from 2021 through 2025.
The government’s directive also encompasses a review of the special consumption tax on gasoline, with an assessment of its feasibility to reduce to 0% during the same five-month period. The timing of these measures is strategic. An implementation date of November 1, 2026, would coincide with the period leading up to the Lunar New Year (Tet), a time when many businesses ramp up production to meet year-end orders and consumer demand is high. For electricity-intensive industries such as steel, cement, chemicals, and paper, even a modest reduction in energy input costs can have a significant impact on operational margins. As Dr. Hoach observed, in a context where the average Consumer Price Index (CPI) increase for the first nine months was 4.52% and GDP growth targets remain ambitious, reducing input costs is essential for maintaining economic stability.
The regulatory mechanism for these adjustments is strictly defined. If the calculated price decrease is less than 1%, EVN must report to the Ministry of Industry and Trade without adjusting the tariff. For decreases of 1% or more, EVN must submit a plan for the ministry’s review and written feedback. The Ministry of Industry and Trade is tasked with ensuring the implementation schedule from November 1 and reporting on any issues beyond its jurisdiction to competent authorities. While the government has set the target of a 2% reduction, the final outcome hinges on EVN’s ability to demonstrate cost savings from the detailed review of its 600 trillion VND cost base. The next verified step in this process is the completion of EVN’s cost calculation and the subsequent submission of the price adjustment plan to the Ministry of Industry and Trade for final approval.
