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Busting the electric monopoly

Update: July, 21/2012 - 10:35

While Electricity of Viet Nam (EVN) has long held a monopoly over the power market, it will only take four years to dismantle it, Viet Nam Energy Association chairman Tran Viet Ngai told Tien Phong (Vanguard) newspaper.

What are the advantages of seperating Power Generation Corporations (PGCs) from EVN?

In EVN's existing organisational structure all PGCs are affiliated to the corporation. That's a disadvantage of the competitive electricity market in our country.

EVN's outstanding debt in domestic and foreign banks is huge. In addition, EVN is the owner of many power projects in Viet Nam, including power lines and stations. As a result, EVN has a big problem when it comes to funding the continued implementation of its projects. So if the PGCs are separated from EVN, it will help reduce EVN's investment burden, which stems from the PGCs. If the PGCs are then returned to the Ministry of Industry and Trade, they will have the Government as their guarantor for borrowing investment money from the banks.

We should understand that the separation does not harm the power industry. Instead it will help to consolidate EVN's management of its assets.

In my opinion, it is high time to restructure EVN to rescue it from serious operational losses.

In its proposal, the VEA suggests the separation should include the National Load Dispatch Centre (NLDC) and the National Power Transmission Corporation (NPTC), is that right?

Yes, that's right. As at present the NPTC is still under the EVN, so it will be in a more difficult position to ask for credit from commercial banks or any credit institution. If it is a business, the NPTC will have its own legal status.

Meanwhile the NLDC can decide which electricity company can load onto the national grid and at what time.

The electricity power trading corporation (EPTC) will also be separated from EVN to establish three corporations – in the north, south and central region. The three corporations will operate independently and can compete against each other in terms of prices.

When all the separations are completed, EVN's management will be contained in multi-targeted power plants, five power corporations and 62 EVN units in provinces and cities nation-wide. And the main function of EVN will then be to sell electricity to end users.

Such an organisational restructuring will enable the Government to monitor electricity trading more easily as there will be no more overlap between whole sale with retail prices.

Do you think that your association's proposal to cut short the time frame for deregulation of the electricity price from 10 to only four years is workable?

The road map to achieve the competitive electricity market by EVN is 17 years (from 2005-22). That's too long! In my opinion, the key reason for this is to serve the interest of a certain group of people, not the people in general.

According to my calculations, four years are enough. To make the market operate, you simply have to ‘eliminate' EVN. And the EPTC will sell electricity directly to its sub-units in provinces and cities without going through any mediating agencies.

People are increasingly worried about electricity price rises, what is your comment on that?

It is the responsibility of the Ministry of Trade and Industry to find out whether there is anything improper in claims lodged by EVN that their business is operating at a loss.

As far as I know, the average buying price is VND700/kWh (3.3 US cents) while the selling price is VND1,506/kWh (7.2 US cents) – including VAT. Do you think that EVN operates at a loss as they have claimed?

I think electricity prices must go down this year as many hydro-power plants have connected to the national grid. The cost of electricity produced by hydro- power plants is much cheaper than for coal-fired plants or diesel powered plants.

If our proposal is accepted, I'm sure that the electricity price will go down. — VNS

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