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Ambitious national power plan faces big challenges

Update: February, 04/2012 - 10:12

Viet Nam Energy Association chairman Tran Viet Ngai spoke with Cong Thuong (Industry and Trade) newspaper about the nation's 10-year master plan for electricity, known as Master Plan Seven.

What are the goals under Master Plan VII?

The electricity sector has been making efforts to meet national power demand and the number of blackouts has fallen significantly thanks to sufficient reservoir levels and a slower industrial growth rate. However, real challenges are ahead.

Master Plan VII was developed meticulously and comprehensively, targeting to increase the country's total power capacity to 75,000MW by 2020 and contributing to meet 70 per cent of the goals set in the national economic development plan. So far, however, Viet Nam can produce 24,000MW, so whether another 51,000MW can be added in the next nine years is a tough call.

Do you have any recommendations?

Up to now, almost all the hydroelectric reserves with a capacity of 50MW or more have been exploited, and resources of coal, gas and oil are being depleted while nuclear power development remains only on paper. Under the plan, by 2020, coal-fired generation will account for 46 per cent of total power supply, meaning that 79 million tonnes of coal will be required. Similarly, about 5 billion cu.m of gas is currently being used to generate power, but by 2020, 15-20 billion cu.m will be needed. Where are we going to get all this coal and gas?

The three major sources of coal are now the coal basin in the northern province of Quang Ninh, the Red River coal basin and imports. There is over a billion tonnes of coal left in the Quang Ninh coal basin, but to extract 2.5-3 million tonnes annually, we need US$300 million to build a mining facility. An investment of $3 billion could help get another 30 million tonnes of coal annually. While domestic clean coal costs $50 per tonne, each tonne of imported crude coal is $110-120, a figure expected to increase. Let alone the fact that only two countries – Australia and Indonesia – have agreed to sell us coal with limited volume.

The Red River coal basin has more potential, with the reserved of 200 billion tonnes, but it's not easy to exploit coal there because the river delta is a fat land for agriculture production and has high population density. Scientists are thinking about coal gasification in densely populated areas, including Ha Noi, Hai Phong, Hung Yen and mining in other places such as Thai Binh, Ha Nam and Nam Dinh. To do so, it's time to start conducting studies to identify mining positions.

Meanwhile, gas supplies for power generation meet 37 per cent of demand. As a result, importing liquefied gases should be taken into account to ensure capacity to generate 10,000MW as planned.

There is a high potential for renewable energy, but to develop nuclear power, Viet Nam depends entirely on overseas resources, including materials and human resources. The country also has a huge potential for wind power which requires not only time but significant investment. Solar power could be concentrated in rural and mountainous areas or on islands. Small hydroelectric plants should also be built in remote areas to avoid massive deforestation for large dam projects and minimise the need to finance an additional grid network.

The remaining thing is to instruct people to use electricity safely and effectively.

Where is the financing going to come from to increase capacity?

To get a bank financing for mines, 30 per cent of counterpart capital is needed, or $200 billion to add another 51,000MW in capacity over the next 9 years. The country can manage 40 per cent of the needed investment and domestic banks can offer $10 billion at maximum. Meanwhile, official development assistance (ODA) gives priority to social welfare projects, not power projects.

Alongside Master Plan VII, we need a financing plan. It now takes 7-8 years to build a thermal power plant. So, to ensure the success of Master Plan VII, plant construction should begin this year. In addition, bidding policies and power pricing policies also need to be reformed. Power prices are not attractive to investors since they remain controlled to help curb inflation. Subsidies are needed to develop renewal energy but it's not easy to find funding.

What should the Government do to realise Master Plan VII?

I can think of three key measures. First, the Government should establish a steering committee empowered to make decisions on finance and staffing instead of waiting for months for approval from the Government or relevant agencies. Second, the progress of projects must be inspected regularly and ineffective ones suspended and their investment withdrawn. Third, the key to ensuring the success of a project is to select competent contractors in terms of experience, financing and multi-sector co-operation.

This was proven effective in the construction of the 500kV grid which Viet Nam completed in two years thanks to the co-operation of the armed forces, while similar construction in other countries has taken eight years. In another case, the Son La hydroelectric plant was completed two years ahead of schedule thanks to selection of the right contractor and having proper policies for land clearance and resettlement of affected residents. — VNS

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