A 110kV transformer station in the northern mountainous province of Lao Cai - Illustrative image (Source: VNA)Hanoi (VNS/VNA) - The Ministry of Finance (MoF) has asked theGovernment to stop the electricity subsidy for poor households from next yearbecause of its negative impact on the national poverty elimination policies.
In five years from 2011 to 2017, more than two million poorhouseholds received financial supports for their electricity bills with 8trillion VND (344 million USD) allocated from the State budget. In 2018, theState Bank plans to use 1 trillion VND (43 million USD) to help about 1,800poor households with their electricity bills.
When the policy started in March 2011, a poor householdreceived a monthly subsidy of 30,000 VND (1.3 USD) for 50kWh. From December2017, the subsidy was raised to 51,000 VND (2.2 USD) a month.
Although it has helped to ease financial burdens put on poorhouseholds, the policy has still showed several drawbacks, including affectingthe national sustainable poverty reduction strategies in the long term.
According to the MoF, the unconditional cash assistance takesaway poor households’ momentum to escape from poverty and creates a dependentmindset among them.
Therefore, for the period between 2019 and 2020, the MoF hasproposed two alternatives including withdrawing the electricity subsidy orusing its financial resources for the Zero Hunger Action Programme.
The survey conducted by the MoF on 53 provinces revealedmajor approval for the first plan. Therefore, the ministry asked to end theelectricity subsidy for poor.
Several experts endorsed the proposal.
Economist Bui Trinh compared the support as a drop in theocean.
“The monthly electricity subsidy of 51,000 VND should beeliminated as it is so small and no poor households can really feel they arebeing supported,” he told Nong thon ngay nay (Countryside today)newspaper.
“The poorest are those who have to rent houses. Manytenants living in rooms of only 15s.qm but have to pay high electricity billsas landlords overcharge,” he added.
Economist Dinh Tuan Minh said the withdrawal would encouragepoor households to be conscious of their electricity usage. The responsibilityof implementing welfare programmes should be shouldered by the Ministry ofLabour, Invalids and Social Affairs, not enterprises.
“We should not use policies to intervene in the pricingsystem,” he said.
“Electricity providers will operate effectively when they payattention to their own work instead of bothering to issue subsidy policies forpoor households,” he added.
Ngo Tri Long, former head of Price and Market ResearchInstitute under MoF, said that EVN built their own pricing structure, offeringa special deal for the first 50kWh. The more electricity one consumes, thehigher he has to pay. The structure accelerates power saving and embracessocial welfares at the same time.
“The Government’s help must encourage poor households escapefrom poverty on their own. In other words, we should give them rods not fish,”he said.
Meanwhile, Dang Quan Dieu, former head of Policy Departmentunder Vietnam General Labour Confederation, said it was impossible for MoF towithdraw a social welfare policy for poor households.
“The change of electricity price may create little impacts onnormal families. For low-income households, they need support to reduce povertysustainably,” he said.
According to Dieu, poor families should enjoy welfareprogrammes with clear blueprints such as subsidies of electricity, socialinsurance or tuition fees.-VNS/VNA
VNA
