Billions dollars for power plants, little for transmission system

With this unbalanced investment, even when the electricity plants become operational, the power shortage will not be solved, since there is no wire system to transmit power to consumers, an official from the Electricity of Vietnam Group has warned.

PetroVietnam’s $1-billion Vung Ang 1 power plant in the Ha Tinh-based Vung Ang Economic Zone, expected to be operational this year, is evidence of this issue.

Nguyen Manh Hung, CEO of the National Power Transmission Corporation (NPT), has recently cautioned that the plant is likely to be left unused upon its scheduled completion, due to the lack of a transmission system.

PVN had promised to support NPT in completing infrastructure serving for the plant, but NPT still had to carry out most of the work by itself, said Hung.

“This scenario, if does occur, will result in huge damages for the economy with the severe power shortage,” he warned.

“The investors will also be affected, since they cannot sell electricity despite their huge investment into the establishment of the plant.”

Hung added that even the capital city of Hanoi cannot avoid the power shortage.

The capital may face power cuts this summer if the power transmission projects under construction fail to reach completion on time, he said.

According to an official from the General Department of Energy under the Ministry of Industry and Trade, the project to build the 220kV power wire system to connect with the Van Tri power station has been delayed due to low progress of site clearance.

“Many power sources such as the Hoa Binh, Son La hydropower plants are ready to prioritize supply for Hanoi, but can do nothing if the transmission project is not completed,” he said.

Power industry faces capital shortage

Like other infrastructure projects, the power projects are also challenged by financial problems.

An EVN report shows that last year it invested a total of VND63 trillion ($3 billion) in power projects, but that a third of the sum was intended to clear debts and bank loans.

Though many major state-run enterprises in the coal, and oil and gas sectors have invested in the power industry, EVN is the only player when it comes to setting up transmission systems.

However, the power monopoly also assigned all of the investment, maintenance and operation tasks of the system to NPT, which is suffering financial turbulence.

“NTP is in an alarming financial state. It is meaningless when you invest in the power generating plants, but neglect the transmission system,” said Hung at a meeting in 2010.

Last year, the CEO also confirmed the enterprise’s “negative financial state,” saying NTP is only paid VND80 for a kWh, while the global price is around VND200 a kWh.

Hung said since the company cannot earn profits with such low payments, it has to borrow from the bank for most of the investments.

“However, most banks refuse to provide loans for us, even when the Prime Minister ordered them to help.”

EVN has recently proposed six urgent projects to solve the power shortage in the southern region, but there have yet to be any sources of capital, he said.

“Investment in power transmission should be considered infrastructure investment, and thus should be prioritised,” he demanded.

For his part, To Quoc Tru, director of the Center for Energy Consultancy under the Vietnam Energy Association, said the transmission system can currently meet only 50 per cent of the total generated power.

“The industry should have invested in the power plants and power transmission systems simultaneously, rather than putting them under separate investment,” stated Tru.

“The government should have a solution to maintain a source of capital for NPT.”