The National Assembly Standing Committee has convened its sixth session to discuss the amendment of eight laws, including the Electricity Law. The Government proposed amending the law to allow all economic sectors to invest in electricity transmission lines.

National Assembly Chair Vuong Dinh Hue said the State is holding a monopoly in electricity transmission, including construction, operation and management.

If the State opens the field (transmission lines and transmission stations, including backbone lines such as the 500 KV North-South) to all economic sectors, including foreign investors, it needs to specify which kinds of projects private investors can build as well as the projects the State will assign to the Electricity of Vietnam (EVN).

Minister of Investment and Trade Nguyen Hong Dien said the draft law would specify the types of transmission grid works allowed for private investors.

Allowing private investors to develop electricity transmission lines proves to be the best solution to settle the electricity shortage.

If private investors are allowed to participate in the development of electricity transmission network, this would help the State control electricity prices, and prevent price fluctuations and threats to the electricity system.

People will not have to incur additional costs, while state-owned companies would be relieved of the burden of developing transmission lines. The amount of money to be saved would be up to VND11 trillion a year.

Foreign investors now make up more than half of privately run electricity generation projects, so they will also invest in electricity transmission projects as well.

“They will pour money into the electricity transmission network, while the State will still control the electricity regulatory unit. This will allow the system to operate effectively,” Dien said.

The Ministry of Industry and Trade (MOIT) is drafting the eighth national electricity development plan. Localities have registered many electricity generation projects with total capacity of hundreds of thousand of MW. However, the development of transmission lines has not been mentioned.

Analysts say that while wind and solar power projects are booming, the investment in the transmission network is modest. This will lead to overloading of the transmission network, which will forces electricity plants to reduce generation capacity.

Tran Dang Khoa from EVN said that investment in electricity generation proceeds faster than investment in transmission lines. It takes 5-7 years to develop an electricity generation project using traditional fuel, but only six months to develop a solar power project, and 12-18 months to develop wind power.

Regarding investment in transmission lines, EVN has to strictly follow the procedures. It took 2-3 years to complete the 220 KV line.

Trung Nam Group was the first private investor to invest in transmission lines. It built the 500 KV Trung Nam – Thuan Nam transmission line that receives input from its 450 MW solar power plant and other renewable power plants nearby.

The electricity volume transmitted from its 450 MW plant via the 500 KV transformer station and transmission line over the last year accounts for only 8 percent of the transmission capacity.

In the future, it will transmit the electricity of other plants as well the electricity from Van Phong Thermopower Plant.

However, there can be problems when private investors build transmission networks. Trung Nam Group is facing problems, including the arrangement of funding sources to maintain the operation of the 500 KV Thuan Nam transmission network, since the electricity selling price has not been fixed for the capacity of 172.12 MW (only 277.88 MW out of 450 MW have electricity selling prices fixed).

In a document to the Prime Minister, Ninh Thuan People’s Committee said while waiting for the handover of the Thuan Nam – Vinh Tan 500 KV line at zero dong to EVN, the plant transmits electricity to other projects in the province and bears transmission costs for the 500KV transformer station.

“It’s unfair for Trung Nam Group which has to bear the same electricity output cuts as other solar power projects,” the document said.

Local authorities have proposed that EVN prioritize using electricity from the 450 MW plant at the highest possible level, and set an electricity selling price for the 172.12 MW capacity. 

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