>> NA seeks answers to Vietnam’s most pressing questions
Deputy Prime Minister Hoang Trung Hai pointed out reasons for power shortages while admitting his responsibility to the situation.
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| Deputy PM Hoang Trung Hai |
Hai made the statement at a discussion on November 22 at the on-going National Assembly session.
The deputy PM, who is also head of central steering committee of the national power development plan from 2006 to 2015, or Plan VI, said if the Plan VI was carried out well, the country would not face power shortages. Under the plan, the national power consumption is supposed to increase by between 15% - 17% per year, equal to 3,000 MW per year. Vietnam will need a total investment of USD6 billion annually, or 10% of the country’s total development investment for the plan’s implementation.
Causes for power shortages
Hai attributed the national power shortages to the capital shortfall resulting from the impact of the regional and world economic downturns. Slow site clearance is also a major cause of the power lack, Hai said, explaining that most power projects are facing stagnant site clearance.
According to the deputy PM, the power insufficiency is due to power price mechanisms. Vietnam’s power price is 5.2 cent/kWh, much lower than that of regional countries such as Thailand (8.5 cent/kWh), Singapore (13.5 cent/kWh), Malaysia (7.6 cent/kWh) and Indonesia (8 cent/kWh). He says it is the country’s uncompetitive power prices that discourage investors.
Investors and contractors lack of competence, people\'s bad awareness of energy saving and outdated technology are also blamed for the power shortages, Hai elaborated.
Market mechanisms needed for power prices
Deputy PM Hai said it is needed to deal with difficulties for underway power projects to ensure their implementation pace.
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| It is necessary to deal with difficulties for underway power projects |
Due to world price changes, value of all construction and EPC contracts in Vietnam have increased. Therefore, many contractors delayed power projects, he explained.
Hai also noted that it is necessary to renegotiate with contractors and help them to tackle difficulties to continue the projects, including Quang Ninh 2 and Hai Phong 2 thermal power plants. Besides, attractive investment policies should be applied to encourage companies to invest in renewable energy projects.
Hai also disclosed that the government plans to issue measures to restructure the electricity industry by the end of 2010, aiming to facilitate operation of a competitive power generation market scheduled next year.
Under the competitive power generation market mechanism, the Electricity of Vietnam (EVN) will only operate a number of its strategic plants, while the rest will be separated from it for independent operations.
However, in the beginning of the mechanism application, EVN will continue distributing power, Hai said, explaining that EVN’s strategic plants will help stable power supply and avoid losses for newly-separated firms.
Hai emphasised the necessity of a market mechanism for power prices and expected that NA deputies would agree with it.
“We have gained initial successes in the market mechanism application in petroleum prices. If we do not apply the same mechanism for power prices, there will be no ways for us to ensure enough power supply, particularly in the next 50 to 100 years,” Hai said in closing.
