Vietnam pledges sufficient power for enterprises

Investors afraid of power shortages

According to the Vietnam Business Forum (VBF)’s Power and Energy Sub Working Group, foreign investors were not worried about an increase in electricity prices and most of them were willing to adapt to an annual increase. They have accepted that Vietnamese electricity prices are among some of the lowest in the region. Moreover, low electricity prices have not been a key factor in investing in Vietnam. Therefore, the VBF recommended that Vietnam should increase electricity prices for consumers who use more energy, helping encourage greater energy efficiency.

Nordic Business Association in Vietnam Chairman Sigmund Stromme said that regionally-low electricity prices would limit direct investment in power infrastructure.

Foreign companies have also expressed concern about power shortages rather than increased electricity prices. Korea Chamber of Commerce and Industry in Vietnam Chairman Ryu Hang Ha said that Vietnam might face power shortages due to some major power projects lagging behind schedule, especially in the south. To resolve the problem, the government should shorten the approval process for power projects in the south.

Electricity to operate following market prices

Minister of Industry and Trade Vu Huy Hoang said that power production and supplies had remained good since 2011. The total designed capacity of all Vietnamese power plants has reached around 30,000 MW with backup capacity of up to 20 percent, even 30 percent in the cool weather.

“Sometimes power supplies have been unstable in a given area due to poor power distribution systems. This is a major concern for foreign companies,” Minister of Industry and Trade Vu Huy Hoang said.

The minister also addressed the scheduling problems facing power projects. Firstly, investors have paid special attention to the negotiation, commitment and guarantee of the government in the build-operate and transfer (BOT) contracts such as foreign exchange and legal issues which has meant that negotiations have proved time-consuming. Secondly, some investors have taken a lot of time to arrange finance. He also said that electricity prices would follow market prices at the beginning of 2016.

Prime Minister Nguyen Tan Dung said that with a backup capacity of around 20-25 percent and the problems in the long-delayed power projects to be overcome, Vietnam would ensure power supplies for the economy. The country will continue to implement the power-saving campaign and improve quality of power sources as well as strictly implement market mechanisms in electricity prices.

Hoa Phuong