Vietnam strives to develop competitive power market

Deputy Minister of Industry and Trade Cao Quoc Hung

According to Dinh The Phuc, the deputy director of the Electricity Regulatory Authority of Vietnam under Ministry of Industry and Trade (MOIT), although the competitive power generation market has operated quite smoothly, Vietnam will face many challenges by 2015 when it moves to a competitive power trading market. The reason is Vietnam is at its early stage to develop a competitive power market and has many limitations such as lack of experience to develop a power trading market and poor infrastructure regarding power plants and plans to train power operators.

To make good preparations for the power trading market, Deputy Prime Minister Hoang Trung Hai recently asked MOIT to work out a real competitive power trading market by 2015. The Deputy Prime Minister noted that Vietnam should make cautious steps in developing this market based on learning experience from other countries in the world to find out the most suitable model for Vietnam.

At a Vietnam-Norway workshop on hydro-power and electricity market reform recently held in Hanoi, Per Christer Lund - an electricity industry consultant based in Singapore, said that Vietnam’s annual power growth is over 12 percent, therefore the power industry needs to be transparent and fair in its sale prices. The participants in the market must have rights to make decisions as they thoroughly know about the operation and competition process of the power production, distribution to offer consumers the most competitive prices.

Sharing the same view, E. Kirkeby Garber, the Vice Chairman of SN Power Group in Southeast Asia region said in the near future, if Vietnam wants to develop a competitive power trading market in a sustainable manner, the prices must be determined by the market and consumers accept it. Consequently, the power industry can attract more investment and develop without the government’s subsidies. Experts suggested that Vietnam needs to simplify investment procedures and raise transparency to create a flexible power market. A development roadmap to form a competitive retail power market including three phases is relatively suitable, however, they also warned that Vietnam needs to determine where it is in each phase of the roadmap. The first successful step would be a cushion step for further development in later phases.

The roadmap for Vietnam’s electricity market reform offered by MOIT includes four phases. In 2010, it allowed foreign and private investors to produce and sell electricity to the Electricity of Vietnam; forming a competitive power generation market from 2011-2014; developing competitive power trading market(2015-2022) and operating a competitive retail sale power market (after 2022).

Source: VEN