VietNamNet Bridge – Not until after 2022 will Vietnam have a full-fledged competitive power market, says a draft decision on a roadmap for development of the local power market.

The draft decision was on Tuesday posted on the website of the Ministry of Industry and Trade for public comments. According to the draft, Vietnam’s competitive power market will have three levels of development.

The competitive power market is taking shape at its first level, which will last until 2014. From 2015 to 2022, the competitive wholesale market will be developed, and thereafter the competitive retail market will be formed.

The formation of the competitive power market is aimed at abolishing subsidy in the power industry, providing customers with a multiple choice of power suppliers, attracting investors into the power sector and reducing the price hike pressure.

However, Tran Viet Ngai, chairman of the Vietnam Energy Association, said the time for the competitive power market to become full-fledged should be shortened. He suggested the competitive power retail market should be formed in the period from 2015 to 2017 for free competition among sellers and removing subsidy quickly.

The competitive power market started operations in July 2012. Experts said one of the conditions for a truly competitive power market should be supply always larger than demand, which Vietnam had yet to achieve.

Hydropower currently makes up some 40% of the nation’s total power output. The major hydropower plants are run by Vietnam Electricity Group (EVN), while private investors only own medium- and small-scale hydropower plants.

In the competitive power market, medium and small hydropower plants are no match for the large-scale ones operated by EVN, but they can only compete with those generating power from coal, diesel oil and wind turbines. Meanwhile, coal-fired, diesel oil-fired and wind power plants will hardly find outlets due to high production costs.

The draft decision says the competitive power retail market will be complete some time after 2024. Then, electricity companies will set power retail apart from power distribution network operation, and thus separate units in charge of power retail and distribution network operation will be established.

In the period 2016-2022, for the development of the competitive power retail market, power system operators and power market managers will be separated and not have conflict of interests with market participants.

SGT