Localities drop power planning

On the sideline of the conference on “Power Quality Management in Manufacturing Industries,” reporter of the Vietnam Business Magazine was granted an exclusive interview with Mr Dong Duc Khoi, Deputy General Director of the State-owned Electricity of Vietnam (EVN) on urgent matters of the current Vietnamese electricity sector.

In recent months, power outage seems to have been addressed. Could you tell whether blackouts will happen in upcoming years?

It seems that only EVN is blamed for the power failure by customers while the group takes over only 50 % of the country’s electricity output and other companies manage the rest. In the first six months of this year, EVN suffered a loss of nearly VND6,000 billion (US$316 million) and bought expensive oils (for thermal power plants) but it is still selling at loss-making prices provided by the Government. We have to supply cheap electricity for the country’s key projects while others never do so. As a rule, they only invest in profit-taking businesses. EVN is sort of a public utility business to a certain extent and a commercial business to a certain extent. I think, it is neither of them.

We are longing for the formation of competitive electricity market. Current problems can be solved if a competitive power retail market is formed. If the current roadmap of building a competitive electricity retailing market in 2020, power shortage will exist until then.

EVN has proposed the government to end ladder-pricing regime on electrical consumption (price is higher for greater volume of electricity used). This means the poor are not given preferential treatments. Did EVN take it into account?

I do not think so because poor people do not use electricity very much. Hardship forces them to lead a saving life. Meanwhile, the rich is the main consumer of electricity. In large cities, many families spend VND30 million (US$1,650) a month on electricity and they never care a small treatment offered for some initial kilowatts of electricity used but the quality of electricity. But, with the current context, the quality cannot be improved. This indeed affects both the rich and the poor. Personally, I think market-based electricity prices will create more funds for development and bring high-quality products for consumers. The State can set up a fund, sourced from power companies, to support the poor and other priority groups. Then, the poor still enjoys preferences from the State.

In fact, electricity prices in our electricity are still lower than many regional countries. Currently, we are buying domestic coal at a price US$33 per tonne and we are going to import the fossil fuel at over US$100 per tonne. As a result, we will surely incur much heavier losses. Investors will never spend money on unprofitable business.

What will attract investors into the electricity sector?

To attract investors, I think we must wait until the opening of competitive power retailing market in our country. If the supply exceeds the demand by 20 %, power producers will have to compete to sell their products. Then, the quality of electricity will be much better. Meanwhile, consumers will pay what they really use. With good profit, investors will come.

In a recent speech, you complained that localities did not include electricity development plan in their master development plan. Would you mind giving more details?

I don’t know whether authorities think of how much electricity will be used when authorities plan to build a residential area. When all things are not soundly calculated, it will become a difficulty for the electricity sector to meet the demand in full. Provinces and cities always drop electricity development plans in their socioeconomic development plans. This missing complicates our works.

Currently, when localities plan industrial parks, they only think of dividing sections, building roads, clearing construction sites, not power systems. EVN is the electricity investor but none really sees it an investor. If an investor wants to build an industrial park, provincial authorities are actively instructing and transferring the site for him while we have to find the way to build power systems for that industrial park.

If economic and social planning misses the power sector, we will possibly never complete our tasks. – VCCI

Tags: Vietnam electricity, Vietnam energy, Vietnam power shortage