Vietnam EVN Proposes Power Price Hike amid Insufficient Supply

The state-run Electricity of Vietnam Group (EVN) is seeking the government’s approval to hike power prices to boost investment in the industry despite current insufficient supply resulting power cuts in many localities nationwide.

EVN Chairman Dao Van Hung attributed the current power shortage in Vietnam to low power prices that have discouraged both producers and investors.

The electricity industry has put into operation no new power plants for three years due to failure in capital mobilization, Hung said, noting that Vietnam’s current average power prices of VND1,100/kWh or less than 5 U.S. cents/kWh is much lower than that in many countries worldwide.

He elaborated that EVN, the investor of the 1,200-MW hydropower project, is finding hard to mobilize capital for the construction.

EVN hoped the government would approve its power price hike plan to change the situation; if not, the country will continue incur power shortages through 2012 as a result of modest supply and soaring demand, he attributed.

He added that EVN, the country’s sole power distributor, has done its utmost to boost power supply for the national economy, including increasing power purchases from neighboring China and from high-cost sources, which resulted in its losses of VND4.7 trillion in the first half of 2010.

In consent to Hung’s view, Pham Thi Thu Ha, deputy director of the state-owned Vietnam National Oil and Gas Group (PetroVietnam) said if the government declines the power price hike, Vietnamese investors will find hard to invest in power projects abroad.

She explained that PetroVietnam’s 1,400-MW Luong Phabang hydropower project in Laos is stagnant as the two sides have not yet reached an agreement on power price.

Many PetroVietnam’s power projects are also bearing high production costs due to increasing prices of imported coal, she added.

Recently, experts said a large number of sluggish power projects in Vietnam, particularly coal-fired ones, is mainly blamed for the current power shortage nationwide because of slow capital disbursement.

Difficulties in capital mobilization and weak competence by investors and contractors have also held back construction paces of many power projects plus unreasonable and overlapped power development planning and uncompetitive power prices.

Vietnam is forecast to lack one billion kWh of electricity this year.

Tags: Vietnam electricity prices, Vietnam energy