Communist Vietnam plans to try out electricity market next year

Aug 19, 2010, 5:27 GMT

Hanoi - Communist Vietnam plans to test a market-based system for electricity production and distribution beginning in the spring, officials said Thursday.

The plan would break up the current monopoly over power distribution held by state-owned Vietnam Electricity (EVN). It was expected to attract foreign investment into Vietnam's power sector, where demand is growing up to 15 per cent per year.

'The pilot period will be launched in the second quarter of next year,' said Pham Quang Huy, head of the markets department of the Electricity Regulatory Authority of Vietnam.

All domestic power producers with a capacity greater than 30 megawatts would be required to participate in the market. They would sell their power to a government-chartered single buyer, the Electric Power Trading Co, which would then resell power to distribution companies around the country.

Power generators owned by foreign investors would be exempt from the pilot market and would continue to be paid under their existing contracts, said William Derbyshire, a consultant to the authority.

Wind and geothermal generators are also exempt from the pilot market because the government is seeking to encourage eco-friendly power generation. In the long run, new foreign-owned plants might be included in the market.

'[The government] expects the market will bring in investment from both foreign and domestic sources,' Derbyshire said. 'The general thrust is to open up markets, remove EVN's monopoly and make the generation and distribution process more transparent and fair.'

Vietnam suffered waves of blackouts this summer as new power generation failed to keep up with the rising demand. Several major thermal and hydropower plants are slated to come online this winter.