return icon Vietnamnet.vn

Breaking the monopoly: key to the power industry development

Vietnam needs an electricity power policy under which the market rules, investors make a profit, and the poor can afford electricity.

Supply sources

Power plants in Vietnam belong to different owners. EVN (Electricity of Vietnam) holding company runs large plants such as Song Da, Son La, Ialy, Tuyen Quang, Tri An Hydropower and Vinh Tan 4 Thermopower.

 

 

{keywords}

The Hoa Binh Hydropower Plant

 

 

EVN’s subsidiaries specializing in producing electricity include GENCO 1, 2, 3, Thu Duc Thermopower and Thuan Binh Wind Power. Of these, only GENCO 3 has been equitized, while the remaining companies are single-member limited companies.

Besides EVN, PetroVietnam, Vinacomin and others also generate electricity. About 2 percent of electricity consumed is from imports.

The electricity daily consumption is 0.6 billion kwh, or 220 billion kwh a year. The electricity generation installed capacity is 0,6 billion kWh/24h = 25 triệu kW (25.000 MW). Son La Hydropower Plant has the capacity of 2,400 MW, while Hoa Binh 1,920 MW.

However, the real electricity generation capacity is just a little higher than 50 percent of the installed capacity. Son La provides 10.2 billion kwh a year, while Hoa Binh 8.2 billion. Meanwhile, Phu My Thermopower, the largest in the country, can provide 17 billion kwh.

If Vietnam wants to increase the electricity output by 10 billion kwh, or 5 percent, a year, it needs to build one more hydropower plant as the same size as Son La, or Hoa Binh, or it needs to build one more Phu My every two years.

 

If Vietnam wants to increase the electricity output by 10 billion kwh, or 5 percent, a year, it needs to build one more hydropower plant as the same size as Son La, or Hoa Binh, or it needs to build one more Phu My every two years.

 

The current investment rate is VND25 billion per MW of installed capacity of hydraulic power and VND50 billion per MW of real generation capacity. The figure would be higher for thermal power, about $2 million per kwh.

Who will spend money to build one hydropower plant like Son La every year, which costs VND60 trillion, or $2.5 billion?

With electricity generation sources with plentiful owners and short supply, this is enough for the power generation market to form. GENCO 3 has been equitized, and GENCO 1, 2 and other companies also need to become joint stock companies. The plants belonging to EVN Holding also need to be separated into independent plants, and restructured into joint stock companies, together with PetroVIetnam and Vinacomin’s plants.

EVN has stockholder equity of VND200 trillion, which is just enough for 20 percent of the total electricity demand. It now borrows VND400 trillion, and if the interest rate is 6 percent per annum, it would have to pay VND24 trillion in interest a year. And if it paid the principal within 10 years, it would pay VND40 trillion a year.

Towards a competitive distribution market

The distribution is being undertaken by power companies. Two thirds of the electricity output is reserved for the production sector. However, there is no big problem with the consumers. The electricity price in Vietnam is competitive, and enterprises benefit when they use more electricity. There is no reason to complain about the centralized management.

Problems only exist in the household-use sector. Consumers complain as they have to pay more in summer in accordance with the multi-tiered price mechanism. The Ministry of Industry and Trade (MOIT) designed a single pricing mechanism, but has withdrawn the solution as it was not applauded.

Consumers believe that the electricity price is unreasonable because EVN is enjoying a monopoly in distribution. EVN is a state-owned enterprise which has a lot of problems characterized for state-owned enterprises.

EVN’s subsidiaries need to switch to joint stock companies, and especially public companies to have higher transparency. By that time, many electricity users can be both clients and shareholders of power supply companies.

Maintaining the transmission system

Power companies buy electricity from electricity generation plants and sell electricity to consumers through the transmission system. The transmission is implemented by EVNNPT (Vietnam National Power Transmission Corporation), a 100 percent EVN invested corporation.

If considering the importance and role of the transmission company, which needs to ensure electricity security and electricity system safety, EVNNPT is not going to be equotized.

However, there should be a reasonable financial mechanism for EVNNPT. It needs to be given the right to negotiate with every buyer and seller about transmission prices.

The possibility of equitizing EVN

The operation model of EVN is quite cumbersome. It would be better for EVN to be divided into three large companies in charge of power generation, transmission and distribution.

If so, the role of the State would be setting reasonable policies to satisfy the demand for power and settle problems of social security, but it would not intervene in electricity pricing. In the future, many power generation plants won’t belong to EVN. 

Ngo Van Tuyen

Experts suggest adjusting electricity retail price once every six months

Experts suggest adjusting electricity retail price once every six months

Electricity consumers complain that retail electricity prices keep increasing.

Electricity Regulatory Authority rethinks single pricing model

Electricity Regulatory Authority rethinks single pricing model

The Electricity Regulatory Authority (ERA) has changed the proposal of allowing household consumers to choose to pay electricity bills under either a multi-tiered price or single-price mechanism.

MORE NEWS

10 houses with special architecture in Vietnam

With bold ideas, architects can create houses that are both aesthetic and functional. Here are 10 interesting houses in Vietnam.

89 people killed in traffic accidents during seven-day Tet holiday

A total of 152 traffic accidents occurred nationwide, killing 89 people and injuring 111 others during the 2023 Tet Lunar New Year holiday from January 20-26, reported the Traffic Police Department.

End of Tet holiday marked by high traffic congestion around major cities

In a bid to avoid the congestion, many people opted to return on Wednesday afternoon or Thursday morning.

Water resources planning scheme for 2021-2030 announced

The Ministry of Natural Resources and Environment (MONRE) has announced a water resources planning scheme for the 2021-2030 period with a vision to 2050, which was approved by the Prime Minister in December 2022.

Vietnamese businesses could join global supply chains with sound strategies: experts

A survey conducted by the association showed 63% of Japanese enterprises said they would continue investing in operation expansion in the next 1-2 years, reflecting that investors have great expectations for Vietnam's economic growth.

Ba Ria-Vung Tau welcomes nearly 2,400 international cruise tourists

International cruise ship Mein Schiff 5 with 2,370 tourists docked at SP-PSA port on January 26.

VIETNAM NEWS HEADLINES JANUARY 26

Da Lat faces traffic congestion due to tourist surge

VIETNAM BUSINESS NEWS JANUARY 26

Cashless payments continue to grow in popularity

What is the driving force for economic growth ahead in 2023?

The impressive growth momentum during the past year is expected to be a premise for Vietnam to achieve the growth target of 6.5% in 2023, according to economic experts.

Almost 3,000 tonnes of farm produce exported to China via Lang Son's border gates

Exports of agricultural and fruit products, mainly dragon fruit and mango, reached almost 2,700 tonnes to China through Lạng Sơn Province border gates on January 24, the third day of the Lunar New Year.

Should the personal income tax law be amended before 2026?

While analysts and workers hope the personal income law (PIT) will be amended as soon as possible, the Ministry of Justice (MOJ) says it plans to amend the law in 2026.

Singer Ha Phuong releases three songs, turns fairy in Tet photoshoot

During her visit to Vietnam on the occasion of the Lunar New Year 2023 (Tet), Vietnamese American singer Ha Phuong has released three new songs and an Ao Dai photoshoot.

Stronger FDI inflows expected this year

Despite enduring the long-term impact of the COVID-19 pandemic, Vietnam still managed to attract a large amount of foreign direct investment (FDI) in 2022, with the outlook forecast to be optimistic moving into 2023.

Blockchain technology used in many fields in Vietnam

Vietnam is now among the leading countries using blockchain. Many people often associate blockchain with Gamefi or cryptocurrency, but it is used in many areas.

Hoang Sa exhibition centre affirms national sovereignty

The Hoang Sa exhibition centre in Da Nang City displays and archives historical documents, exhibits and images which testify to Vietnam’s legitimate sovereignty over the two archipelagos.
back_to_top