Deputy Prime Minister Nguyen Van Thang Directs EVN to Calculate and Propose Average Retail Electricity Price Reductions Starting November 1, 2026

In a decisive move aimed at easing financial pressures on households and businesses while strengthening broader social welfare initiatives, the Vietnamese government has intervened directly in national utility pricing. Following a high-level administrative meeting on October 27, Deputy Prime Minister Nguyen Van Thang formally instructed Vietnam Electricity (EVN), the country’s state-owned utility monopoly, to urgently review, compute, and optimize internal operational costs. The objective of this sweeping directive is to formulate a comprehensive and legally compliant proposal for reducing the average retail electricity selling price across the nation.

The anticipated price reduction mechanism is slated for an emergency implementation window running from November 1, 2026, through March 31, 2027. This period strategically encompasses the winter and early spring months—a time when commercial energy demands fluctuate and domestic heating or lighting needs rise in specific regions. By mandating swift adjustments, the administration seeks to provide immediate financial relief to end-users navigating persistent economic headwinds, supply chain shifts, and inflationary pressures.

Comprehensive Cost Optimization Mandate for EVN

Under the directive issued by the Deputy Prime Minister, EVN cannot merely adjust pricing models superficially; the utility must fundamentally audit its internal financial architecture. The government has ordered EVN to identify and execute maximum cost-saving measures across all stages of power generation, transmission, distribution, and administrative overhead.

The mandate underscores that any proposed pricing framework must strictly adhere to existing statutory regulations governing the mechanisms, scheduling, and legal boundaries of retail electricity price adjustments. EVN has been tasked with compiling its meticulously calculated proposals and submitting them directly to the Ministry of Industry and Trade (MoIT) for rigorous examination, technical auditing, and formal evaluation.

Furthermore, the Ministry of Industry and Trade has been designated as the lead coordinating agency. MoIT is responsible for vetting EVN’s financial submissions, verifying that all projected savings translate genuinely into consumer price cuts, and ensuring that the implementation stays firmly on track for the November 1 launch date. Should any structural adjustments or policy elements exceed the direct administrative authority of the ministry, MoIT is required to report immediately to higher government echelons for rapid executive decision-making.

High-Level Inter-Ministerial Coordination

The October 27 directive emerged from a concerted cross-departmental strategy session held at the Government Office. The high-stakes meeting convened key architectural figures of the national economy, including top leadership from the Ministry of Finance, the Ministry of Industry and Trade, the Office of the Government, along with senior representatives from the Ministry of Justice and EVN’s General Director.

This multi-agency collaboration reflects the intricate legal and financial hurdles associated with state-regulated utility pricing in Vietnam. While EVN manages the physical infrastructure and operational execution of the national power grid, pricing policies directly interface with national fiscal policy, taxation frameworks, and statutory consumer protection laws.

In tandem with the electricity price reduction directive, the government has adopted a two-pronged approach to macroeconomic relief. Alongside the power sector overhaul, the Deputy Prime Minister assigned the Ministry of Finance to spearhead an urgent collaborative review with the Ministries of Industry and Trade, Justice, and other relevant bodies. This secondary task involves evaluating the legal viability, jurisdictional authority, and macroeconomic impacts of reducing special consumption tax rates—specifically targeting fuels such as gasoline, where tax reductions down to 0% are being weighed to combat logistics inflation. The Ministry of Finance must complete this legal and feasibility assessment and report its findings to competent authorities prior to November 1, 2026.

Current Electricity Pricing Architecture and Regulatory Background

To contextualize the magnitude of the upcoming pricing adjustments, it is vital to examine the baseline framework governing the Vietnamese power sector. Under Decision No. 599, which took effect on May 10, 2025, the average retail electricity price in Vietnam was established at 2,204.0655 Vietnamese Dong (VND) per kilowatt-hour (kWh), excluding value-added tax (VAT). That adjustment marked a notable 4.8% increase compared to preceding tariff structures.

The established average retail price is calculated based on a complex formula that aggregates total electricity production costs, transmission expenses, operational overheads, and a reasonable average profit margin calculated per kWh of commercial power sold throughout a given fiscal cycle. This benchmark price serves as the foundational legal and economic bedrock for designing specific retail tariff schedules tailored to distinct consumer categories, notably residential households, agricultural producers, and industrial enterprises.

For residential consumers, the current retail price structure relies on a six-tier progressive ladder system. Under this model, electricity costs scale upward based on household consumption volumes:

• Tier 1 (First 50 kWh): 1,984 VND/kWh
• Higher Tiers: Progressive increases culminating in 3,460 VND/kWh for households consuming in excess of 400 kWh per month (excluding VAT).

Industry analysts note that constructing a price reduction plan within this intricate framework requires delicate balancing. Approximately 83% of the total cost of goods sold for electricity generation is tied directly to fuel input prices, technology depreciation, primary energy generation mixes (such as coal, gas, hydropower, and renewable integration), and foreign exchange rate fluctuations. Because input commodities are heavily exposed to global market volatility, driving down the average retail price mandates exceptional operational thrift from EVN and strategic alignment across state fiscal buffers.

Broader Economic Implications and Consumer Relief

The decision to compel a temporary reduction in electricity prices through the winter and early spring of 2026–2027 highlights the Vietnamese government’s proactive stance toward fiscal stewardship and social safety net preservation. Energy costs represent a major overhead expense for manufacturing plants, export processing zones, small and medium-sized enterprises (SMEs), and everyday households.

By alleviating energy burdens during this critical five-month window, policymakers aim to stimulate domestic consumption, bolster industrial competitiveness, and curb secondary inflationary pressures on consumer goods. High utility bills historically exert a cascading effect across the economy, driving up the costs of manufacturing, agricultural cold storage, and retail commerce. Lowering electricity tariffs provides direct cash-flow relief to businesses, enabling them to stabilize production lines and maintain workforce stability heading into the new year.

As the strict November 1 deadline approaches, all eyes remain fixed on the Ministry of Industry and Trade and EVN to deliver a transparent, legally sound, and economically viable pricing schedule. The collaborative efforts of the Ministries of Finance, Industry and Trade, and Justice will ensure that the reduction mechanism satisfies rigorous regulatory standards while successfully achieving its core mandate: protecting the welfare of Vietnamese citizens and maintaining robust macroeconomic stability.