Vietnam will not cease to lack electricity as monopoly continues to exist. Just last week, the Ministry of Industry and Trade asked the government to restructure the power supply system so that power prices are really set by the market.

According to the ministry, the government should recognize the need to separate the different aspects of the power operations to allow competition in the field. At present, the Electricity of Vietnam (EVN), the state-owned utility, undertakes all the work related to electricity generation, distribution and investment. With that, EVN is the only electricity wholesale buyer, who retails the same electricity to its consumers nationwide. The ministry strongly believes that it is necessary to have more electricity distributors, which would enable consumers to have better choices and buy electricity from those who offer good-quality products and at reasonable rates.

Its appeal was put down in a note sent to Prime Minister Nguyen Tan Dung during the weekend. They reiterated how the power shortages over the past several years may have been brought about by droughts and very high power demand, but the present arrangement on the power system also has a big influence to it. Unless EVN is reformed, this shortage will continue for a very long time. Businesses hurt by power shortages now want the government to enact on the longstanding proposals to break up EVN’s power-generation and distribution arms, and to allow more private competition. In a competitive market, the price of a product can be lowered when the productivity of the sector is raised, and this can be easily seen in the electrical sectors.
For over a period now, 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. The current all-in-one system will not create a transparent environment in attracting investors to develop new sources of energy.

If power shortages continue in the coming years, the ministry suggests reducing the amount of power allocated to steel, cement and chemical plants, who not only consume a lot of power, but also have a big hand in worsening environmental pollution in the country. Pushing Vietnam’s electricity rates up to regional levels would also be unreasonable since the costs of labor and materials in the country is below average compared to neighboring countries.

A flexible electricity price scheme has long been suggested. Many believe on the need to set a low price for those who consume little electricity. Price levels would be higher for electricity use in peak hours. Vietnam, by fact, has a lot of hydropower plants, which have been operating for a long time, with their depreciation periods over. These hydropower plants can provide electricity at low prices. The Ministry of Trade and Industry insists that there is only one proposal to reform EVN which was submitted to the government. Whether the government would act on it or not, no one is certain either.