Energy negotiations with China leave uncertainties

Because of this year’s expected power shortage, Vietnam will have to source some of its electricity from China, perhaps, at unfavourable terms.

The country will have to import 4.6 billion kWh of electricity from China this year but it is facing difficulties in negotiating prices with their Chinese partners.

According to the Northern Power Corporation (NPC), a subsidiary of the state-owned Electricity of Vietnam Group (EVN), to date, the two sides have not yet reached an agreement for 2011.

Early this year, Chinese firms proposed raising electricity prices from USD5.1 cents per kWh to between 6 and 7 cents per kWh. However, EVN, which is Vietnam’s sole power distributor, has not yet agreed.

Even though the two sides have not yet settled on a new price, EVN has already been importing electricity from China since January 1.

The unknown disparity between the buying and selling price for EVN means they may incur losses. Last year, such losses amounted to around VND28 trillion (USD1.34 billion). This year, however, that figure could increase, since the amount of imported power is expected to rise to about 4% of the national power supply.

Vietnam has been much dependent on China for the last three or four years to help meet the electricity demand for its northern region.

In the meantime, Vietnam has not yet fully used power sources from China because electricity is transmitted via China’s 110-kV and 220-kV lines, which are isolated from Vietnam’s national power grid. For this reason, the northern region cannot share their redundant electricity to other localities in the surrounding areas.

Despite current power shortages, many domestic power projects, already underway, have lagged behind schedule because of a lack of manpower and the slow pace of site clearance.

Adding to the shortfall, the country’s power grid does not work up to its full potential. The power leakage rate last year was around 10.25%. – Dantri

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage