Drought has been a major factor behind electricity shortages. Do you think the electricity sector depends too much on hydroelectricity? 

Hydroelectricity accounts for 60 per cent of electricity supply so a lack of water in dams means a 70 per cent reduction in capacity, equivalent to 6,000-7,000 MW. The electricity sector generated 20,000 MW so far this year but it does not meet demand for production and life. The sector estimates demand will increase 18 per cent this year compared with last year but I think will be about 25-26 per cent. This shortfall is why there have been electricity shortages and power cuts recently. 

Developed countries have a good electricity supply. They ensure their electricity sources and national grid can meet demand, while also having an emergency power supply of between 15 and 40 per cent of total supply. So if a power plant has any problems, its supply can be replaced by another. Their wire networks are also very modern, ensuring the quality of electricity transmission. In Vietnam, our electricity equipment and wires are old and need to be upgraded. 

These projects need huge amounts of coal for their operations. But local coal resources can only satisfy one-third of total demand, and the remainder must be imported. The electricity industry will face problems in locating coal sources in the future. The 13 projects are important because it’s estimated they will supply 13,800 MW, equal to output over the last ten years. It will provide a huge amount of electricity supply and the proportion from hydroelectricity will fall significantly to 2015. After 2015 the electricity industry is to have an emergency power supply. But it’s impossible for the 13 projects to be completed by 2015, I think, and maybe only the PetroVietnam will be ready. 

The major reason for the sluggishness of power plants is a lack of capital. I think this lack of capital is the important issue. EVN lacks $4-5 billion and the whole electricity sector lacks $10 billion each year. Why does the sector lack capital? Because power prices are too low, leading to low profit ratios and making it difficult for those who invest and operate in the sector to borrow from domestic and foreign banks. This is why only a few foreign investors have invested in power plant projects in recent years. 

Recently, at a conference on attracting capital for investment in the energy sector, we recommended that the government regulate the power price. Prices in other countries are higher than in Vietnam: 8 cents/kWh in Thailand, 18-19 cents/kWh in Cambodia, 14 cents/kWh in the Philippines and 10 cents/kWh in Japan and Indonesia. Meanwhile, it’s 5.5 cents/kWh in Vietnam, and this is unreasonable. I think the government should adopt measures to help people understand and accept higher electricity prices. The World Bank has also suggested the government regulate electricity prices, but it has delayed doing so.

They should have two price schedules: one for the poor and for those who contributed to the revolution, as well as students, of about VND1,000-1,100/kWh which is supported by the government, and another for well-off households with monthly incomes of VND10 million ($526) or more, of about 7-8 cent/kWh. Enterprises will pay the business price. 

Electricity is a restricted sector because of its importance to the national economy, but it’s beyond the capacity of EVN to be the sole player. The role of the government is very important in operating the network. A capable agency is required, such as a ministry or department, for the energy sector, with a Deputy Minister taking the lead in implementation and supervision. 

Last year the Association also met with the government about this issue. We believe that power generation should not be separated. The sector should be united and the different aspects should be connected with each other. In the long term, the electricity sector can be divided into regions. Each region will have special sections for electricity generation, distribution and sales, so that the electricity price is flexible and creates a competitive market. Now, however, we need a working group that includes the Government Office, MoIT, the Ministry of Planning and Investment, and the Ministry of Finance, to intervene in the sales and purchase of electricity by EVN as well as to supervise and regulate the electricity price.