Power struggle for Vietnam

Vietnam will continue to suffer power shortages in 2011 even though the national power system’s current output is double that of five years ago.

According to Electricity of Vietnam (EVN), the water-line at hydropower water reservoirs by December 31, 2010 was far below the benchmark, particularly at big reservoirs.

EVN’s deputy general director Duong Quang Thanh, said low water levels at hydropower reservoirs would not only adversely affect power supply in 2011 during dry season but also threaten agricultural production. For example, northern plains and midland locations would need 2.7 to 3 billion cubic metres of water to service 630,000 hectares of cultivated areas for this winter-spring crop coming.

Since hydropower contributes up to 35 per cent of the whole [power] system’s output water shortages have made the system undersupply, producing an average 16,000 megawatts (MW) in normal conditions in 2010, meanwhile the system’s total output would reach 18,500MW when running at a full capacity.

In this context, sourcing power from oil or gas-fuelled power plants appears to be unfeasible due to high costs. In 2010, to balance power supply in the dry season EVN must use 1.8 billion kWh of power provided by oil-fuelled plants and incur losses of over VND5 trillion ($250 million).

Director of Can Tho Thermo-power Plant, a member of EVN, Nguyen Huu A said last year the firm produced 1.125 billion kWh of power, mainly fuelled by oil, and incurred losses of VND3 trillion ($150 million).

“We are in a dilemma as our labourers would be out of work if we halted production. However, if we keep up running, we will inevitably incur losses,” A said.

In 2011 gas-fuelled O Mon 1 and Can Tho thermo-power plants would contribute around two billion kWh to the national power system. However, VND8 trillion ($400 million) would be required to procure fuel for power generation, given the fact that current oil fetches around VND17,200 per kilogramme (value added tax, VAT not included).

In this context, adjusting electricity price based on market rules is considered a practical remedy. EVN had reportedly submitted 2011 electricity price revision plan to competent state agencies and the Ministry of Industry and Trade for appraisal. However, adopting a suitable power price for 2011 and letting the electricity price to be defined based on market rules have proven to be a headache for management authorities.

This year the price of electricity was already proposed to rise up 30-40 per cent on the current levels. If getting the nod from competent state bodies, the new [power] price level was expected to bolster investments into power plant development.- VIR

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage