Vietnam: EVN makes bold promises

With ongoing electricity shortages across Vietnam in the last few years and lower than required investment and generation capacity development, Electricity Vietnam (EVN) has made the bold statement that it will increase generation by 16 per cent in 2011.

With many of its largest projects considerably delayed and an unusually dry rainy season in the north that will mean hydroelectric plants must operate well below capacity again, EVN is having to look north to China to fill the gap. Deputy CEO Duong Quang Thanh put it simply in interviews: “We will negotiate with China to increase our purchase of power as much as possible for the year.”

EVN has thus been forced to continue with its international bond issue and has asked the government to provide a guarantee of US$667 million. International investors have been reluctant to lend to Vietnam's economic groups, even performing and profitable ones such as PetroVietnam and Vinacomin, and they seem less than keen to put money into underperforming EVN.

EVN has continually failed to invest strategically in Vietnam's electricity generation and though some of this reluctance is due to the market pricing structure and a reliance on hydropower over other forms, its investment choices have also been questionable.

Over the last five years EVN has increasingly focused on non-core business elements, including a large telecom company, banking, real estate, and finance. While expanding into these areas the group handed back 13 coal-fired power stations it had been given the responsibility to build under the energy master plan.

EVN may be happy to take even a higher than normal yield in the international market as interest rates at home are now reaching 14 per cent for deposits and over 17–18 per cent for loans. The Vietnamese government may be seriously considering increasing the caps it maintains on electricity pricing to make the generation market more attractive to foreign and domestic investors alike. Until this happens it is unlikely that EVN will be able to attract adequate investment.

For more news and expert analysis about Vietnam, please see Vietnam Focus.


© 2010 Menas Associates

Vietnamese energy sector gets help from Germany and Russia

Vietnam is to receive a sum of €120 million as preferential loans from the German Development Bank (KfW) to carry out a €162 million project, “improving effectiveness of energy in rural areas”. The agreement was signed in Hanoi, on 7th September, between KfW and Electricity of Vietnam (EVN).

EVN will distribute the capital for the next four years, between projects to be carried out in 26 provinces, aimed to upgrade low and middle-tension electricity grids in rural areas to reduce electricity losses, ensure safety and raise the quality of electricity supply. Under the agreement, the period for repayment will be nine years.

In other areas, Rosatom's Chairman Sergey Kirienko has said that the atomic energy group and Vietnamese scientists are working on setting up a training centre for nuclear power plants and an atomic energy research institute in order to build the most modern and safest nuclear power plant. Under the terms of co-operation Rosatom Group will provide training for about 70 Vietnamese staff, to help Vietnam become a nuclear energy centre for peaceful purpose in ASEAN.

State President Nguyen Minh Triet who met with Kirienko in Hanoi, stressed the importance of the construction of a first nuclear power plant in Vietnam, and said the country looks forward to working with Russian experts who will provide Vietnam with the capital, training and technical assistance in completing the project and accelerating the country's socio-economic development.

Source: VOVNews

For more news and expert analysis about Vietnam, please see Vietnam Focus.