Vietnam electricity wholesale reform to spark industry

Subject

Liberalisation of Vietnam's electricity sector.

Significance

Electricity Vietnam (EVN) will lose its wholesale electricity distribution monopoly from 2016, following a mid-August Ministry of Industry and Trade announcement. Private wholesale power distributors will be able to operate, while independent power producers will no longer have to sell their output solely to EVN. Price competition will be permitted within government-set caps. The move, part of a three-stage process to liberalise Vietnam's electricity sector, reflects widespread disenchantment with EVN and a realisation that with the power-distribution grid under constant strain from a growing economy, a more competitive sector is needed to support economic and industrial development.

Impacts

• More sophisticated power production, distribution and pricing mechanisms will be developed.
• Lower power costs would reduce business overheads, contributing to economic growth.
• Increased competition among electricity wholesalers should raise service standards.
• Public-private partnerships will probably increasingly happen in power projects.
• Foreign companies may take these up if regulations for the sector are sufficient.