Electricity, the backbone of industrialization

EVN will increase commercial electricity output by 10.5-11 percent annually from 2016-2020

Outstanding achievements

An Electricity of Vietnam (EVN) Group report shows that when Vietnam took over its power network from the French, the capacity of the entire system was about 100MW, and annual electricity output was 53 million kWh. From 1955-1975, although they had to work under the harsh conditions of war, electricity workers built many new thermal power plants. In 1962, some 110kV power transmission lines were built in the north.

In the south, the construction of the Da Nhim Hydropower Plant and the 257km long Da Nhim-Saigon 220kV transmission line began in 1961 and finished in 1964. This was the first 220kV power transmission line to be built in Vietnam.

In 1996, the eighth congress of the Vietnam Communist Party set the goal of the country becoming an industrialized nation. At that time Vietnam’s power network remained modest. Total power plant capacity was 4,500MW, and annual electricity output stood at 14.6 billion kWh in 1995. Apart from several ten thousand kilometers of cables, and transformer stations ranging from 0.4-220kV, the whole country had only one North-South 500kV super high voltage transmission line. Poor infrastructure led to common electricity shortages and rotational power cuts, especially in the central and southern regions.

However, following great efforts over the last two decades, Vietnam’s power network has been upgraded and currently ranks second behind Indonesia in Southeast Asia, and 30th in the world with total capacity of power plants reaching more than 38,800MW, up nearly 8.5 times, and annual electricity output of 2015 increasing by 11 times. The national grid currently consists of nearly 20,000km of 220-500kV transmission lines, and several hundred thousand km of 110kV or lower voltage transmission lines and distribution transformers.

The national grid notably now has covered all parts of the country, including mountainous, border, and island areas, with 99.8 percent of communes and 98.76 percent of rural households nationwide having access to electricity. The national grid has met the demand for electricity in major cities, provinces in key economic zones, large industrial complexes of foreign invested businesses, while at the same time supplying electricity for agricultural production such as shrimp breeding, dragon fruit growing, and the operation of irrigation systems in southern localities.
The electricity sector has made a great shift from a state-subsidized monopoly sector to a service sector operating under market mechanisms in a competitive environment to provide customers with better service.

The backbone of industrialization

In 1996, Vietnam set a gross domestic product (GDP) target of 8-10 fold growth by 2020 compared with 1990 (in 1990 its GDP reached nearly US$6.5 billion). The target was exceeded in 2007 with GDP reaching US$71 billion, and in 2014 GDP reached US$184 billion, more than 28 times higher compared with 1990. In 1995 total value of foreign trade reached US$13.6 billion, with exports accounting for nearly US$5.5 billion. In 2015, foreign trade totaled US$312.87 billion, including about US$162.4 billion in export value. In the field of foreign direct investment (FDI) attraction, there were just several hundred FDI projects in Vietnam in 1995, but by 2015, about 20,000 FDI projects were ongoing nationwide with total registered capital of US$280 billion. Vietnam has achieved many UN Millennium Development Goals in terms of hunger eradication, poverty reduction, healthcare, and education, integrating more deeply into the global economy.

Together with other infrastructure sectors, the electricity sector has significantly contributed to the country’s development. Electricity has helped Vietnam shift from manual production to the use of modern industrial methods, restructure the economy, create more products for export, improve the business environment, enhance competitiveness, attract more FDI, and promote socioeconomic development.

Domestic and foreign investors have seen great progress in the Vietnamese electricity sector in terms of power generation as well as the quality of power supply and customer service. Le Minh Hai, Chairman and General Director of the Viet Duc Steel Joint Stock Company based in Vinh Phuc Province, said that his company specialized in manufacturing steel pipes and structural steel with annual capacity of more than 700,000 tonnes, paying over VND300 billion in taxes each year. Hai attributed the company’s success to high-quality, safe and stable power supplies, explaining that if power supply was interrupted for just one second, the company would face losses worth hundreds of millions of dong. In 2012 the company invested about VND1 trillion in expanding its steel lamination plant, and it took high interest rate loans to finance this project. Hai said stable power supply was one of the factors accounting for the success of the project.

Nissin Brake Vietnam Co., Ltd. General Director Fukusawa said, “I started my work in Vietnam three years ago. Before I came here I heard that power supply in Vietnam was not good, with power cuts occurring very often. However, since I came here to work, I have faced almost no unexpected power cuts. Stable power supply has been an important factor helping us maintain production.”

Pursuing new goals

EVN General Director Dang Hoang An said in the 2016-2020 period, along with building the electricity market according to a prime ministerial approved roadmap, EVN would continue investing in power plants and power transmission grid projects and effectively manage the operation of power systems to ensure sufficient supplies and contribute to national energy security; continue restructuring and reorganizing its member companies to enhance the effectiveness of production, trade and investment, and increase productivity, striving to turn EVN into one of the top four electricity units in ASEAN.

From 2016-2020, EVN will increase commercial electricity output by 10.5-11 percent annually. By 2020 domestically generated and imported electricity is expected to total about 262-270 billion kWh, with the percentage of electricity used for transmission and distribution to decrease to 6.5 percent, while reducing the System Average Interruption Duration Index to 400 minutes, and reducing the time required for completing electricity access procedures to 10 days from 2016.

The Vietnamese electricity sector has the right to be proud of its achievements over more than six decades of development so that it can continue playing a pivotal role in ensuring national energy security and contribute to realizing the country’s development goals in the near future./.

Dinh Dung