EVN proposes the government to approve market price mechanism for electricity

It is likely that power supply in 2011 would be very difficult; water shortage and lack of investment capital are believed to the main reasons. EVN has requested Ministry of Industry and Trade to submit proposal on market price mechanism for electricity and scheme for electricity price in 2011.
EVN predicted that electrical load growth rate in 2011 would continue to rise, annual growth rate of the entire system would be about 17.63 percent, particularly, and electricity demand during the dry season is expected to increase by 18.3 percent.

As of December 31, 2010, water level of hydroelectric reservoirs was much lower than the full level (normal water level), especially in large reservoirs. Total water volume needed to fill those reservoirs is estimated to be about 12 billion cubic metres, equivalent to approximately three billion kWh hydropower shortage.

In the water shortage situation of the hydropower reservoirs, if thermo and gas turbines power sources, especially new coal-fired power plants breaks down or operate unstably, the supply of power in 2011 would be very tense.

EVN said it has been producing and buying power from high cost sources, while the power prices have not been adjusted. The volume of investment construction in 2010 and subsequent years is very large, while the clearance is extremely difficult, there are many inadequacies in contractor’s capacity, and it is difficult to mobilise social capital, etc.

Therefore, EVN has proposed the government to soon issue a series of measures to ensure that EVN could have stable financial balance and be able to mobilise capital for investment.

First, the government should soon approve the market price mechanism for electricity and the electricity price scheme in 2011. Second, the government should continue prioritising to allocate ODA and domestic preferential credit sources to EVN’s power projects. Third, the government should direct the relevant ministries to coordinate and facilitate EVN to complete negotiation on domestic and foreign commercial and preferential loans for projects invested by EVN, especially projects such as Lai Chau hydropower plant, Vinh Tan thermo-power plant 2, Duyen Hai thermo-power plant, etc.

Moreover, the government should create conditions for Vietnam Social Insurance Fund to lend EVN 15 trillion dong to invest in power projects of EVN and support EVN to soon complete the procedures for issuing $1 billion bonds to foreign countries.

EVN also asked the government to direct the ministries to soon have solution for the need of nearly 13 trillion dong to maintain production for about 3.85 billion kWh diesel thermal power in the six months of the dry season.

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage