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Heat’s on electric monopoly to accept investment

Pressure is growing for the State-owned Electricity of Viet Nam (EVN) to end its monopoly by opening the door to investment in power production and distribution systems, according to Minister of Industry Hoang Trung Hai.

"If the plan is executed, not only customers but also the country’s power production will benefit," Hai said.

However, the EVN must first take the appropriate steps to remove the preferential status the State has long granted it without threatening the stable growth of this vital industry, he said.

When the US$450 million gas-powered Phu My 3 plant was commissioned in early April, Hai saw it as a turning point in the push to encourage investment. The plant was built under a build-operate-transfer (BOT) contract, where foreign investors build the plant and operate it to recoup their investment. After the investment is recovered, the plant is given to the Vietnamese partner.

Other forms of investment in the sector are encouraged to develop, including independent power plants (IPP), build-transfer (BT), build-transfer-operate (BTO), and joint ventures.

Under a Government plan, enterprises from different economic sectors will be invited to join different forms of investment during the next decade for another 30 power plants with a total capacity of 3,684MW and six joint venture power plants with a combined capacity of 2,623MW.

Electricity generated from those plants would account for 30 per cent of the country’s power capacity by 2010.

Hai has asked the Government to build a legal framework for a competitive power market to lure investment capital.

Although EVN has made some efforts to reform, it remains subject to tough criticism from many State agencies and investors for its monopolistic development plans.

A huge sum of capital must be generated for the power industry to produce 88-93 billion kWh by 2010, said a report from the Ministry of Planning and Investment at a recent national conference on electricity.

However, EVN has sought to limit the proportion of capital to be invested by domestic and foreign businessmen.

EVN authorities also seem bent on increasing the power price as a means of motivating investment, an MPI official said.

"Only by removing the monopoly can consumers, both enterprises and end users, benefit from competitive prices offered by different power suppliers," he said.

Viet Nam’s power production rose to 21.7 billion kWh in 1998, 30.6 billion kWh in 2001 and 35.6 billion kWh in 2002, but the unit price also rose to VND703, VND743.6 and VND840 in the same years.

"It is ironic in the market economy that the more power customers consume the higher price they will have to pay," another conference delegate said. He blamed EVN’s poor management of its supply and distribution system for the problem.

Early this year the prime minister instructed the EVN authorities to improve its management to limit the loss and find other sources of investment rather than increase the power price.

Electricity of Viet Nam workers repair the 500kV transmission line in Da Nang’s Hoa Son commune. — VNA/VNS Photo Ngoc Ha

VNS - (10/05/2004)

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