EVN attempts to retain monopoly in electricity market

VietNamNet Bridge - International consultants have said that Electricity of Vietnam (EVN) should no longer be the only electricity wholesale buyer by 2019. However, EVN wants to extend the deadline.

Vietnam, EVN, monopoly, electricity price

A competitive electricity market would include power corporations, including the Northern, Southern, and Central Region Power Corporations, and Hanoi and HCM City Power Corporations. They would buy electricity directly from power plants to sell to clients – electricity retailers and consumers.

Meanwhile, big electricity consumers, such as steel mills and large foreign-invested enterprises such as Samsung, Intel, Posco and Formosa, would also be allowed to buy electricity directly from power plants.

All power plants sell electricity wholesale to EVN, the only buyer, which then retails electricity to consumers – households and businesses. 

However, under the plan to form up a competitive power market, EVN would no longer hold the monopoly in electricity distribution anymore.

The international consultants - Energy Systems and SW Advisory – have suggested transferring the electricity buy and sell contracts EVN has signed, which account for 95 percent of the total demand, to five power corporations prior to 2019.

By that time, SMO, the unit that regulates the power system and market, would be set up as a unit completely independent from EVN.

The consultants emphasized the necessity of the independence of SMOs from both power sellers and buyers. 

The members of the SMO’s board of management, including the chair and CEO, must not have any business relationship with buyers and sellers.

SMO would be a non-profit institution, while the Vietnam Power Regulatory Unit or the State would be in charge of providing financial resources to maintain its operation.

However, the suggestions are described as “unreasonable” by EVN. The corporation, for example, pointed out that it will need a “transitional period” to transfer contracts signed to the five power corporations.

In a report to the Power Regulatory Unit, EVN said the power corporations don’t have sufficient information and experience about the electricity system to implement complicated works, or to be able to distribute electricity in a reasonable and effective way.

A senior executive of EVN said it has to work with power plants on the daily power transmission plan to balance the supply and demand of the system. 

It also needs to consider many other factors which may affect electricity supply and demand, including the output of hydropower plants in different seasons, the gas supply as input material and the capacity of the 500 KV north-south power transmission line.

Meanwhile, an analyst warned that power plants would meet big difficulties if they have to look for clients themselves, while this would affect investment plans on developing power generation sources and national energy security.

Pham Huyen

Vietnam, EVN, monopoly, electricity price