Aug 16, 2019 / 09:34

Law rules out private investment in power transmission in Vietnam

The Hanoitimes - Despite overloaded power grid in several zones, private firms are not allowed to invest in power transmission projects.

Both officials and experts in Vietnam are aware of the importance to mobilize private capital in electricity transmission but the country’s law has ruled out any chance that the power developers and investors have made so far. 
Power transmission in Vietnam remains under the state control
Power transmission in Vietnam remains under the state control

Vietnam’s Law on Electricity stipulates that power transmission is totally controlled by the state and the construction, management, and operation of the transmission projects are all conducted by state-owned enterprises

“Even when private firms are capable of building transmission lines and handing over to Vietnam Electricity (EVN), the country’s sole power distributor, free of charge, there’s no regulations to take up that assets,” the Nguoi Lao Dong newspaper quoted Phuong Hoang Kim, head of the MOIT’s Electricity and Renewable Energy Authority (EREA). 

Furthermore, maintaining the monopoly on power transmission is the way to keep the electricity prices stable, Kim added. 

Prof. Tran Dinh Long, deputy head of Vietnam Electrical Engineering Association (VEEA), said Vietnam, like other countries, keeps control on transmission system which is the backbone of the power industry. 

For that reason, Long suggested that Vietnam should put the idea of allowing private capital to transmission system on debates at the National Assembly, the country’s top legislation body. 

Necessary to call for private capital to power transmission 

Despite the importance of state-controlled power transmission, Prof. Long still emphasized the necessity of private investment in the 110-kV lines and lower voltage lines, especially for projects which are far from existing transmission lines to better serve their projects.  

Assoc. Prof. Bui Quang Tuan, head of Vietnam Economics Institute, said that the state needs to build regulations allowing private investment in power transmission projects which are then handed over to EVN for operations. He highlighted the availability and quick disbursement of private capital. 

Regarding ideas allowing private firms to invest in transmission projects, mostly in the central provinces of Ninh Thuan and Binh Thuan which saw a boom in solar power over the past few years, EVN has been reported to propose the permission of private investment in this segment. 

“EVN supports the plan to allow other investors to pour money into power transmission projects. EVN will ask its authorized agencies to cooperate and support the investors during the construction and operations,” the Nhip Cau Dau Tu magazine quoted an EVN representative as saying. 

The proposal is viewed as a breakthrough in the context that transmission system is totally invested and controlled by EVN. 

Currently, the power grid in Ninh Thuan and Binh Thuan is overloaded and in need of being upgraded and expanded. Ninh Thuan wants the government to allow them to build transmission infrastructure.

As of the end of June, the country’s total solar power capacity reached 4,543 MW from 89 solar farms, compared to 850 MW by 2020 envisaged in the power plan. 

In a latest move, the Ministry of Industry and Trade (MOIT) has given the green light to private investment in this segment, suggesting that solar power producers would contribute to the power transmission projects, mostly in Ninh Thuan, according to the Nhip Cau Dau Tu magazine. 

For the possibility of private investment in power transmission, the MOIT is completing regulatory framework to mobilize private capital to finance connectivity between private power projects and EVN-run grid.