EVN power monopoly to be short-circuited

Electricity of Vietnam dominates the domestic power generation and distribution marketPhoto: Le Toan

Hai stated that the Vietnamese government would continue reforming state-owned Electricity of Vietnam (EVN) and the power market at the Vietnam Business Forum held in Hanoi lat week.

“During the reform process, we have to accept that EVN still holds a monopoly. We don’t have any other option. If we open up the market to the private sector without an effective legal framework and a smooth management mechanism, we won’t be able to ensure stable power supplies,” Hai said.

EVN is currently the sole power distributor and also the largest power generator in Vietnam. The state-owned group contributes more than half of the total generated power in the country. However, as EVN is the only power distributor in Vietnam, local economists believe EVN’s monopoly is hindering the development of the power sector.

During recent years the Vietnamese government has grappled with reforms to the power market. Three power generation corporations were established last year through the restructuring of EVN and the government began piloting a competitive power generation market two years ago.

“We’d like to make clear that we’re not insistent on maintaining EVN’s unique position, but we have to make steady steps in the reform process,” Hai said, adding that the Vietnamese government had planned to equitise the three power generation corporations to make them more effective.

“A real competitive power market will be launched in future. This means not only power generation corporations, but also power distributors will have to compete in the market,” he added.

Hai’s statement last week focused on the need for Vietnam to address its power generation shortfall through the encouragement of greater private investments in the sector.

Although Vietnam’s economy is experiencing a downturn, the country’s power demand in the first half of this year still rose 11 per cent year-on-year. The Ministry of Industry and Trade estimated that power demand would continue rising from 11 per cent to 13 per cent in the coming years, putting a burden on the existing power supply if new power generation plants failed to meet their construction timelines.

Since Vietnam opened its door to foreign investors in 1986, the country has licensed only five foreign-invested build-operate-transfer (BOT) power plant projects.

Many foreign investors are eyeing Vietnam as an attractive destination for building power plants with Japan’s Sumitomo Group and Sojitz Group already planning to build thermal power plants in central provinces of Khanh Hoa and Binh Thuan. Singapore’s Sembcorp Group is also studying a project in the central province of Quang Ngai.