Vietnam power sector to need annual investments of over US$6 B

Under the plan recently approved by the Prime Minister, electricity price shall be gradually adjusted according to market mechanism and is expected to be 8-9 cents per kWh in 2020. It is currently at about 6 cents per KHh.

Deputy Minister of Industry and Trade Huang Quoc Vuong said, with investment needs of US$ 5-6 billion per year, the current selling price is still not able to retrieve capital for the industry. According to Power plan 7, electricity price will be adjusted towards the proximity to market price and marginal cost.

"According to calculations, the marginal cost is 6-8 cents per kWh. That is the direction, but when the cost increases, the price will be very flexible", said Mr. Vuong.

The Prime Minister has approved the National power development plan in the period of 2011 – 2020. Accordingly, the output of electricity produced and imported in 2015 shall be about 194 to 210 billion kWh. By 2020, the amount of electricity shall reach 330-362 billion kWh. This number will reach 695 to 834 billion kWh in 2030.

Total investment in the power sector by 2020 shall reach about VND 929.7 trillion, which is equivalent to US$ 48.8 billion. In the period of 2011 - 2030, the investment shall require about VND 2,359 trillion or USD 123.8 billion.

The prerequisite for the deployment of Power plan 7 is to set the selling price in accordance with the market mechanism with regulation by the State to stimulate growth, attract investment and encourage competition in the import, transmission, distribution and use of power. The selling price must be able recover costs and create reasonable profits to ensure the self-financing of businesses.