Govt agrees to lower electricity rates to promote productivity

The government has agreed to lower the cost of electricity in a move to create more incentives for boosting investment and productivity while improving the livelihoods of low-income earners.
The agreement was reached at a meeting of cabinet members, provincial governors and the Vientiane Mayor held in the capital this week.
The Minister of Energy and Mines, Dr Khammany Inthirath, informed a news conference on Thursday about the outcome of the new electricity rates approved by the government.

He said residential electricity price will drop by 50 percent while the electricity rates for industrial factories will decrease by 7 to 16 percent once the new electricity price scheme is enforced.
The minister was unable to confirm the exact date for the Electricite du Laos (EDL) to charge the new electricity rates as it requires months to install the new system. The Ministry of Energy and Mines proposed that households that consumed 50kwh per month will be charged a special price (only 350kip per kwh), but those who consume more than 50kwh will have to pay about 700kip per kwh. After that, the rates of electricity will increase annually by only 1 percent until 2025.
However, many cabinet members and provincial governors recommended the ministry to increase the special unit or figure from 50kwh to 150kwh so that more low-income earners can benefit from the new electricity rates.
Dr Khammany said his ministry will further study if the special rate offered for those who consume 150kwh per month will have any impact on the EDL business and the development of hydropower projects in Laos or not. Currently, 1.2 million households consume electricity in Laos, but it’s unclear how many families consume electricity lower than 50kwh or 150kwh and how many more low-income earners will benefit from the new electricity rates.
Dr Khammany said the new electricity rates will not only contribute to improve the livelihoods of local people but also ensure fair and reasonable electricity rates for people and business sectors.
Under the new electricity rates, electricity price for SMEs sector will reduce from 779kip per kwh to 761 kip per kwh. At the moment, industrial factory is charged at the rate of 714 kip per kwh. In the near future, factories that consume 100,000kwh will be charged at 684 kip per kwh, but for those consuming one million kwh will be charged at the rate of only 600 kip per kwh.
Currently the EDL has six electricity pricing slabs: 0-25 kilowatt hour equals to 348 kip per unit, 26-250 kilo-watt hour equals to 414 kip per unit, 151-300 kilowatt hour equals to 799 kip per unit, 301-400 kilowatt hour equals to 880 kip per unit, 401-500 kilowatt hour equals to 965 per unit and over 500 kilowatt hour equals to 999 kip per unit.
The weakness of this system is that if the figures of electricity consumed by households are not promptly taken by the EDL, the rates charged on those households could be higher.
This is unfair for local people and that’s why the government wants to revise the electricity rates for their benefit and the business sector.

By Somsack Pongkhao
(Latest Update June 28, 2019)