Vietnam approves structural reform at power monopoly

The government has given the nod to state-run Electricity of Vietnam (EVN) to rearrange its 11 subsidiaries into five power corporations.

Under the decision, three of the five corporations will cover the northern, central and southern regions respectively while the other two will be for Hanoi and Ho Chi Minh City.

EVN said in its reform plan that the five new corporations, irrespective of their locations, will be allowed to compete with each other to sell power. They can also choose which power plants to buy from.

It also said the corporations would do business in 23 different sectors, including telecommunications, tourism, advertising, finance and banking.

EVN early this year proposed raising electricity prices in 2010 after the Vietnam Coal and Mining Industries Group (Vinacomin) proposed raising coal prices sold to the power sector.

In reply, the Ministry of Industry and Trade said it must mull over the proposals as any power or coal price hike may generate a shock to the whole economy.

Currently, EVN holds 74% of the country’s electricity production output, and dominates the electricity market with 100% of transmission, and 95% of distribution.

The group, however, was recently criticized for investing in other industries. For instance, it poured VND214 billion ($12 million) into stock market acquisitions, which it promptly lost.

The monopoly last year rejected 13 new power projects assigned to it by the government, saying it lacked the funds to carry the projects through.

Foreign investors have long complained that EVN’s monopoly has made working with them unviable and has hampered investment in the sector.

Analysts say that there should be a separate production phase, in which EVN is allowed to hold 20-30% share, while transmission and distribution should be separated from production.

(Source: icon.com.vn)

Tags: Vietnam energy, vietnam power