Vietnam Gropes Around To Develop Competitive Electricity Market



It’ll take Vietnam 10 more years to develop a competitive electricity market. This period is too long for some Vietnamese, who are eager to enjoy competitive electricity prices.


The plan on gradually upgrading the electricity market, approved by the government, indicates that a competitive retail electricity market should take shape in the period of between 2021 and 2023. Minister of Industry and Trade Vu Huy Hoang has recently stated that the competitive market would be ready by 2024.

The half development plan


According to Tran Viet Ngai, Chair of the Vietnam Energy Association (VEA), the Vietnamese competitive power market will experience three stages of development.

In the first phase, from 2005 to 2014, a power generation market will form. The wholesale electricity market will appear in 2015-2021 in the second phase. Ultimately, the retail electricity market will be ready by 2024.

However, Ngai commented, if the plan is implemented, Vietnamese will have to wait too long to see a competitive retail market.

In principle, the first stage of development began in 2005. However, only in 2011, did the electricity generation market become operational on a trial basis. Meanwhile, the official operation only started in July 2012.

As such, it would take Vietnam up to 20 years in total to develop a perfect competitive electricity market.

Tobjorn Kirkeby Garstad, South East Asia Vice President of SNP Power Group, commented at a recent workshop in Hanoi that the Vietnamese electricity generation market is “half-done”, and not a perfect competitive market at all.

The principle of the competitive market is that the government does not impose its pricing policy on power generators,” he said. “The government’s intervention would be necessary when dealing with complicated matters relating to the infrastructure system”.

He also agreed with Ngai that it will take an unacceptably long time to build up a perfect competitive market.

Incapability forces Vietnam to remain cautious


Replying to the criticism that Vietnam has been going too slowly in the path towards a competitive power market, a senior official of the Ministry of Industry and Trade said with the current conditions of Vietnam – poor infrastructure, backward technologies and unqualified labor force – Vietnam is best off going step by step.

“We needed one year long, from July 2011 to July 2012 to make power generators get adapted to the new circumstances,” he said. “Therefore, it would be better not to skip some development periods”.

A report disclosed that 48 power plants in Vietnam had registered to join the bidding on selling power to Electricity of Vietnam, the only wholesale buyer.

Dr Le Dang Doanh, a well known economist, commented that people will still have to pay high prices for electricity until a competitive market takes shape.

“At present, electricity users cannot choose retailers for themselves. They have only one choice – EVN,” Doanh said.

“It is necessary to run a competitive market, where the production costs are made public,” he continued. “Vietnam now needs a transparent market”.


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