News

The state encourages all economic sectors in Vietnam and overseas to make investments in the power sector. However, the country is still suffering from electricity outages.

Foreign investors in electricity power came to Vietnam very early to survey the market and look for investment opportunities. Vietnam is the 15th most populous country in the world with great opportunities and potential. 

However, to date, it has only eight successful BOT (build, operation, transfer) power plants accounting for only 9.7 percent of the total capacity of the entire system. Of these, the Phu My 2-2 complex was put into operation first, in 2004.

In general, negotiating with foreign investors about the development of BOT projects is a complicated and tough process. It takes at least 10 years from the beginning of negotiation to the day the projects begin providing electricity to the national grid. 

Most projects are worth billions of dollars and investors have to seek capital from syndicated loans, and carefully calculate possible profits and time to take back investment capital and anticipate risks. They also require other conditions, including  forex conversion, minimum profits, and foreign currency transfers home.

Meanwhile, large Vietnamese investors such as Vinacomin and PetroVietnam have 426 power plants; EVN 20; GENCO 1, 2 and 3 have 37; and private companies have 369. The types of the plants are diverse, including thermal, hydraulic, wind and solar power.

EVN’s plants account for 38.5 percent of total capacity, while the others are 61.5 percent.

Of the three GENCO electricity generation companies belonging to Electricity of Vietnam (EVN), GENCO 2 and 3 have been equitized. Only 0.13 percent of GENCO 2 capital and 0.87 percent of GENCO 3 have been sold because the electricity prices are low and the risks are high, while the required investment capital is high. 

In recent years, the government has allowed the development of renewables with a price of 9.35 cent per kwh, which has helped increase total production capacity by 20,000MW.

Over the last half century, the electricity generation sector has operated in accordance with the state’s policy under which investors are encouraged to build and develop electricity sources for use. 

Electricity generation has developed with various investment sources instead of only relying on the state, and a monopoly no longer exists.

Vietnam has been advised to continue to attract more private investment in electricity generation as the World Bank recommends that the non-state economic sector should contribute 80 percent of capital to electricity generation by 2030.

Power distribution

After the Khanh Hoa Power Company was equitized, EVN wanted to equitize all provincial power companies. However, the plan was then rejected. 

If the companies had been equitized, investors would not have developed electricity sources in rural areas because of the high investment rate in the areas that would have resulted in losses. At that time, only 50-70 percent of rural areas had electricity.

Finally, EVN implemented a plan to electrify the countryside. To date, 100 percent of communes and 99.58 percent of households have electricity. 

Vietnam’s access-to-electricity index has improved quickly, from 160th to the 25th in the World Bank’s ranking.

Power transmission

In the last few years, the State has allowed Trung Nam Group and three other units to build a super high voltage transmission network of 500kv lines and transformer stations. Clients also built many lines and 110kv and 220kv stations to connect the national grid. This was stipulated in the Electricity Law.

Vietnam buys and sells electricity from and to Laos, Cambodia and China.

EVN buys high-voltage electricity from Xekaman 3 (Laos) for 5.62 cent/kwh and from Xekaman 1 for 1.493 cent/kwh, while it sells electricity (35-22kv) to border areas for 9.48 cent/kwh.

As for Cambodia, EVN sells 220kv electricity to Phnom Penh at different prices depending on the time and season. The price in the dry season and rush hour is 12.87 cent/kwh, for normal hour is 11.44 cent/kwh, and for off-peak hour is 9.72 cent/kwh. The prices are a little lower in the rainy season.

Vietnam also imports 220kv electricity from China. The prices are 6.32 cent/kwh in the dry season and 5.17 cent/kwh in the rainy season, which are lower than the FO- and DO-fired electricity.