VietNamNet Bridge - Minister of Industry and Trade Vu Huy Hoang said last week that electricity prices from early 2016 would be determined by the market. 

Meanwhile, foreign invested enterprises (FIEs) have expressed concerns about a possible electricity shortage from 2018.

A representative of the Power Working Group showed FIEs’ concern about the anticipated unsatisfactory power supply prospect in Vietnam at the mid-term Vietnam Business Forum (VBF).

Sixty-five percent of businesses showed their concern about unstable power supply and the ineffective operation of the Electricity of Vietnam (EVN), the only power retailer. 

Two-thirds of businesses said they have to use standby electricity sources because of unstable supply from the national grid.

Meanwhile, Vietnam has been unsuccessful in attracting foreign investors to power generation projects because of the low electricity price mechanism in the country.

A report delivered at VBF showed that it won’t be a problem for FIEs if Vietnam raises the electricity retail price and that FIEs would accept the price increase of no more than 15 percent per annum. However, it will be a big problem for them if the electricity supply is unstable.

According to Ryu Hang Ha, chair of KoCham, the power demand in the southern region of Vietnam alone increases by 10 percent a year. 

Therefore, the delays of some power projects are feared to trigger a serious energy crisis in Vietnam, possibly to begin in 2018.

The enterprises of KoCham, the US and the EU have confirmed they heard that Duyen Hai 1, Duyen Hai 3, Long Phu 1, Vinh Tan 1, Vinh Tan 3 and Van Phong 1 have been delayed until 2020.

They have urged the government of Vietnam to continue raising the electricity price to attract investors to power generation projects, especially renewable energy projects. 

Reforms have also been proposed in the EVN management and the procedures on licensing power projects.

Minister of Industry and Trade Vu Huy Hoang reassured FIEs that the power supply has been very good since 2011 with the standby capacity big enough to satisfy 25-30 percent of the demand.

Hoang attributed the electricity supply instability to the problems in the transmission system.

“We have requested EVN to arrange capital to upgrade the transmission system,” he said.

“Anticipating that the southern region may face the electricity shortage, EVN is implementing nine power projects to increase the give additional supply sources to the region,” he said.

Hoang reaffirmed the government of Vietnam’s viewpoint that the power price needs to be determined by market supply and demand, which can bring reasonable profits to investors.

“We will make adjustments in electricity pricing in early 2016 as part of the roadmap on floating the electricity price,” he said.

Pham Huyen