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Competitive electricity in Vietnam? It’s still far away

More than one electricity generator and wholesaler exists in Vietnam, but the country still does not have a competitive electricity market.

Vietnam is string for a competitive electricity market
Vietnam is string for a competitive electricity market

Tran Dinh Long, deputy chair of the Vietnam Power Association, under the Electricity Law and the Prime Minister’s Decision No 63, said Vietnam will experience three stages of development before a competitive electricity market is established.

The three stages include competitive electricity generation, competitive wholesaling and competitive retailing.

The first stage was scheduled to last from 2012 to 2017. However, the wholesale market has not been activated.

Meanwhile, there has always been only one wholesale buyer, Electricity of Vietnam.

Vietnam plans to develop existing power companies into wholesale buying companies. However, it is necessary to prepare well for the development, especially the legal framework. But it is unclear when such a framework will be completed.

“The regulations on the operation of the wholesale market and the rules for companies to run are necessary for the market,” Longs aid.

Tran Viet Ngai, chair of the Vietnam Energy Association (VEA), commented that Vietnam has made considerable progress in forming a competitive market with the number of electricity generation plants rising from 34 to 87, operating with high transparency. However, many problems still exist.

In principle, power plants offer prices on trading floors, while wholesale buying companies will buy electricity from the ones that offer the lowest prices.

As a result, many small hydropower plants cannot win competition to sell electricity, while coal-fired thermopower plants cannot bear many offloads during the day.

“The wholesale market is a development stage at a higher level. The elimination of the monopoly in the power sector cannot be fulfilled overnight,” Ngai said.

Consumers

While state management agencies argue about legal framework and technical issues in setting a competitive market, consumers still don’t know what benefits they can expect.

Nguyen Minh Due, chair of the VEA’s Energy Science Council, commented that the aim of the competitive market is bringing benefits in prices and accessibility to power in a convenient and safe way. However, to date, the benefits remain unclear.

“The competitive power market seems to have no relation with consumers. Thus, the ultimate goal of the market needs reconsideration,” he commented.

According to Long, the retail price may or may not go down after the competitive retail market is formed, because the price will depend on many factors.

However, consumers will be able to enjoy the best prices as they will have more choices.