Vietnam eyes more foreign investment in electricity

The Vietnamese government has approved a plan calling for more foreign investments in developing the hydroelectric power of northern Lao Cai province to tap local power potential and ease energy shortage, local newspaper Vietnam Investment Review reported recently.

Under the plan, Lao Cai will create favorable conditions for both Vietnamese and foreign companies to establish joint ventures to build 38 small-and medium-sized hydroelectric plants with an annual capacity of 5-90 mw each. The move will help the province not heavily rely on the national power supply, the paper quoted Tran Thanh Binh, official of the provincial Industry Department, as saying.

Of the 38 planned plants, only seven are under construction with domestic funds, he said, noting that other projects are in dire need of capital, especially foreign one. The first joint venture in Lao Cai's power sector, to which the government has approved in principle, involves two Vietnamese firms and a Chinese one.

Now, most power projects in Vietnam are capitalized by domestic funds, since the country is yet to offer really attractive mechanisms to bring foreign investors to the sector. The biggest hindrance is that the state-owned Electricity of Vietnam (EVN), the country's sole distributor, buys electricity from power projects at low prices, the newspaper said.

To date, Vietnam has attracted only two joint ventures in the power sector: Phu My 2.2 and Phu My 3 in southern Ba Ria Vung Tau province.

The EVN, Vietnam's biggest power producer and sole distributor, predicted that the country will encounter electricity shortage of 180-200 million kw this year due to increasing electricity demand, unfavorable weather conditions, which negatively affect operation of hydroelectric plants, and sluggish construction of power works in some localities.