Vietnam industrialists demand end to electricity monopoly

Jun 23, 2010, 8:42 GMT

Hanoi - Industry leaders and economists said Vietnam's electricity monopoly must be broken up to resolve power shortages that damage production, local media reported Wednesday.

Analysts said electricity production lags behind growing demand because the state-owned Electricity Vietnam (EVN) has discouraged foreign and domestic investment in power plants.

'The shortage of electricity will last forever unless EVN is reformed,' said Hoang Van Dung, deputy chairman of the Vietnam Chamber of Commerce and Industry.

Dung said businesses hurt by power shortages want the government to enact longstanding proposals to break up EVN's power-generation and distribution arms, and to allow more private competition.

Cao Sy Kiem, chairman of Vietnam's Small and Medium Enterprise Association, also demanded EVN compensate businesses when power is cut without warning, Thanh Nien newspaper reported Wednesday.

He said pig-iron manufacturers have repeatedly lost batches of metal when power cuts spoiled them during the casting process.

Thanh Nien reported that some legislators support the calls for competition and new investment.

Senior economist Nguyen Quang A said there should be at least three separate companies operating in the electricity sector. He said that subsidies and price controls were also part of the problem.

'The low price encourages consumers to use electricity wastefully and inefficiently, at the same time as it discourages investors in this sector,' Quang A said.

Plans to reform the power sector have been proposed over the past three years by the Ministry of Trade and Industry. Those would turn EVN into a transmission and distribution company that would buy the electricity from power plants at market rates.

Analysts said the reforms have been held up because EVN has presented its own conflicting plans, which would allow it to keep a toehold in power generation. That could discourage foreign investors who fear EVN would favor its own plants over theirs.

But a senior Ministry of Trade and Industry official denied that EVN had a rival reform plan.

'There is only one plan to reform EVN, and we, the Ministry of Trade and Industry, have submitted it to the government,' said Pham Manh Thang, director of the ministry's Electricity Regulatory Authority.

Thang said he did not know whether the government had decided to approve the plan or not.