Building power plants: incorrect forecasts bring consequences

A Ministry of Industry and Trade report has revealed many problems in hydropower plant investment and blames the electricity shortage on these unreasonable decisions.

To date, the total capacity of power plants is about 14,400 MW, of which one third comes from hydropower plants. However, with the prolonged drought, hydropower plants are running at just 1/3 of capacity.

Vietnam now seriously lacks electricity.

Changing outlook on power sources

Vietnam focused on developing hydropower plants because of the low investment costs and the suitability for the country’s natural conditions. Only recently has the Government realized that it is necessary to reduce reliance on hydropower by developing other kinds of energy.

This new strategy is not well understood by authorities. Many small-scale hydropower plant projects have still been licensed in the provinces, ones that cannot help ensure energy and also bring many negative consequences.

The Central Region Electricity Corporation’s report to Electricity of Vietnam (EVN) showed that the central region and central highlands have hundreds of small and medium-scale hydropower plants, ones that can only provide one million KWH per day. Most of the power consumed by the central region, about 16.2 million KWH per day, is still provided by EVN. Meanwhile, the central region needs a total of some 21.2 million KWH per day.

The Ministry of Industry and Trade report on hydropower plants in nine key central provinces in March 2010 showed that hydropower plant projects were licensed too easily. In many cases, the project’s efficiency was exaggerated. As the result, despite the high number of hydropower projects, the plants cannot provide enough power.

Due to low investment efficiency, doubts have been raised about the effectiveness of power projects with total capacity of 7500MW from nine provinces in the central region. These include 226 projects now under investment study and 120 other small projects that still cannot find investors. That is why the Ministry of Industry and Trade has proposed to halt 38 approved investment projects and another 35 unreasonable projects.

It’s time to develop other sources of energy

In 2008, EVN decided to withdraw its investment in 13 big thermo-power projects, citing lack of capital and difficulties in purchasing coal. EVN could not find the partners willing to sell coal under long term contracts. Other investors, who planned to invest in power projects also noted difficulties in importing coal.

The Ministry of Industry and Trade has offered the good news that Australia, the world’s fourth biggest coal exporter, is ready to negotiate with Vietnamese enterprises to sell coal under long term contracts. Australia plans to increase coal exports and will promote investment in exploiting new coal mines with large reserves.

The ministry revealed that the process of importing coal has begun after the ministry signed a memorandum of understanding with an Australian partner on energy cooperation. Ministry officials believe it will be necessary to speed up implementation of thermo-power plant projects.

Thoi bao kinh te Saigon

Tags: Vietnam electricity, Vietnam energy, Vietnam power projects