Outdated technology blamed for electricity woes

Industrial enterprises complain that they are ‘thirsty” for electricity. Meanwhile, Electricity of Vietnam (EVN) has blamed the problem on enterprises’ “backward” technologies.

Electricity cut everywhere

“The biggest difficulty now for industrial production is the unstable electric supply,” cited Hanoi Planning and Investment Department Deputy Director Nguyen Van Tu.

The electricity shortage has been cited by a Hanoi Planning and Investment Department official as the most significant factor in the city’s unsatisfactory industrial production value.

In May 2010, the industrial production value grew by only 11 percent, while in the first five months of 2010, it grew by just 12.1 percent compared with the same period of 2009. The figures were lower than the average growth rates of the whole country, at 13.8 and 13.6 percent.

Deputy Minister of Industry and Trade Cao Viet noted that “In previous years, the economic growth rate was 7.5-8 percent, but the electricity shortage was not too serious. In 2010, Vietnam expects to have the economic growth rate of 6.5 percent, not high.” He questioned “Why are we so short of electricity? I have been touring some rural areas and I have realized that electricity is cut regularly and on a massive scale.”

No official analysis has been offered to prove that the electricity shortage hinders investment. There is a relationship between the electricity supply and the number of newly registered businesses, as those registered in the first five months of 2010 was equal to 84 percent of the same period in 2009, the most difficult period for the national economy.

In another statistics, during the first five months of the year, only 107 foreign direct investment (FDI) projects increased their investment capital. Total additional investment capital stood at $403 million, a decrease of 38.2 percent in the number of projects and 91.4 percent in capital volume in comparison with the same period of 2009.

“We have to accept power cuts, however, EVN should thoroughly consider when and where to cut electricity. The electricity supply and cuts need to be designed to ensure the fulfillment of 2010 strategic development, especially when we are striving to boost exports to reduce the trade deficit,” Tu maintained.

The key lies in the industrial production sector

A Ministry of Industry and Trade representative admitted that it is very difficult to provide enough electricity to the production sector in the dry season.

According to EVN, although the power company has used electricity from different sources, including FO-run thermo-power (1.86 billion KWH) and DO oil gas turbines (330 million KWH), the supply remains short.

Yet, the electricity output increases monthly. April statistics showed that 267.79 million KWH were provided a day, which increased to 278.8 million KWH.

Nevertheless, additional charges have been increasing even more sharply than the electricity output.

According to an EVN official, in theory, the ratio of additional charges on GDP is 2, meaning that when the GDP grows by 5 percent, additional charges increase by 10 percent. The ratio is now is 4. Meanwhile, demand has not increase too much from the household consumption sector.

“The key lies in the industrial production sector,” the official concluded.

He went on to say that the industrial enterprises use out-dated energy-consuming technologies. “The steel price decreased over the last time, but steel production gobbled up electricity. The same situation occurred with cement production,” he explained when discussing why the GDP growth rate was low while additional charges increased.

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Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage