Experts say competitive power market needs more conditions

Most experts in the energy sector have advocated for the development of a competitive power market to address the chronic power shortage in the country, but said more strict conditions are required to make that near-term vision a reality.

As the government has entrusted the Ministry of Industry and Trade to prepare a legal framework for a competitive power market next year, experts said that a higher pricing scheme for commercial power is a prerequisite condition, alongside other factors like transparency in the industry and doing away with monopoly.

Tran Viet Ngai, chair of Vietnam Energy Association, told the Daily last week that a competitive power market should have more independent power producers and more buyers of generated power from all sources at more competitive prices.

“In the longer term, the country needs to create competition in three main phases of the electricity industry comprising power generation, distribution and trading,” he said when asked for comments on the government’s plan.

In late July, prime minister Nguyen Tan Dung asked the Ministry of Industry and Trade to prepare a project and related legal documents for reforming the electricity industry by developing a competitive power market from next year.

According to an announcement issued by the government’s Office last week, the prime minister required the ministry trade to complete and submit the project and related legal documents to the government by October this year.

Ngai of the energy association said it will also be very important to increase the selling price of power in the market so as to encourage more investors to join the power generation market.

“In my opinions, if the competitive power market is to be launched since 2011, the selling price of power to consumers must definitely be increased up to some 8 US cents per kilowatt-hour compared to the current price of only 5 cents,” he said.

He said other nearby countries had much higher selling prices than Vietnam, including Cambodia approving a price of 18 cents and Thailand 8 cents.

Le Dang Doanh, a senior economic expert, pointed the blaming finger at the monopoly assumed by Electricity of Vietnam Group (EVN). He made clear that a competitive power market is impossible as EVN still makes up some 47 percent of the country’s power generation, but remains a sole distributor of power in the country.

Some experts also said without a level-playing field in power generation and distribution, no investors are willing to pour capital into power projects for fear for low purchasing prices due to the monopoly by EVN, and consequently, it will create a more severe power shortage in the coming years.

Do Duc Quan, deputy director of the Energy Department of the Ministry of Industry and Trade, told the Daily that one of the important conditions for creating a competitive power market was to make a proper legal foundation and strict related legal documents to lure investors into power generation as well as to avoid later disputes between electricity sellers and buyers.

“I think it needs a long time for the country to form a fully-fledged competitive power market; it could be after 2020,” said Quan.

According to the government’s announcement, sufficient power supply will play a crucial role for realising the country’s five-year socio-economic development strategy for the 2011-2015 period.

The government also said that one of the main reasons for the recent severe power shortage was slowness in building and operating power projects due to a lack of investment capital and slow site clearance. – Saigon Times

Tags: Vietnam electricity, Vietnam energy, Vietnam power market