Currently, the Electricity of Vietnam (EVN) signs contracts directly with the power generating plants belonging to EVN and non-EVN independent power plants (IPP). The negotiations for PPA (power purchasing agreement) always take time as it is very difficult to harmonise the benefit of the sellers and buyers. Doubts have been raised about the transparency in EVN’s trading deals, while the buyer, EVN, does not represent customers.

The Prime Minister on January 26, 2006 released the Decision 26 on the development of Vietnam’s power market, which will experience three levels. In 2005-2014, the competitive power generating market will take shape. In 2015-2022, there will be the power wholesale market, and after 2022, the retail power market will be put into operation.

In the first period, power generating plants will offer competitive selling prices and sign contracts on wholesaling electricity with the power trading company, which will then sign contracts on selling electricity with retail companies.

Once the competitive retail market takes shape, clients will have the right to choose power suppliers. In order to have the competitive retail market, Vietnam has to have a power trading company.

The company will come forward and buy electricity from power plants to wholesale to retail companies. This will be a joint stock company, whose members will be big groups, including PetroVietnam, Vietnam Coal and Mining Industries Group (Vincomin), and general corporations, including the Vietnam Steel Corporation, Lilama, Vietnam Cement Corporation. These members will hold 49% of the chartered capital of VND1tril ($62.5mil), while EVN holds 51%.

Nevertheless, the model of the power trading company cannot help lift the doubts over the transparency of trading deals. Some experts have pointed out that the monopoly in power distribution will be handed over from EVN to the power trading company.

Besides, what will happen if the members of the power trading company, PetroVietnam, Vincomin and Lilama, act as the electricity buyers, wholesalers and the clients as well?

Representative from the General Confederation of Labour said that the monopoly would still exist, as there are several hundred power generating plants, while there is only one trading company, which buys power from the plants.

On these worries, Dao Van Hung, Chairman of EVN, said that the existence of a power trading joint stock company will help remove monopoly in power distribution. In principle, the company will only buy electricity from the plants which offer lowest prices. Regarding the issue that the members of the power trading company act as the electricity buyers, wholesalers and the clients as well, Mr Hung said that they have to harmonise the benefits themselves.

According to Mr Hung, the competitive power market will operate like a stock market, where power plants will give offers continuosly, while the trading company will choose to buy electricity from the plants which give most the attractive offers. In Ireland, for example, the offer is given every five minutes, while in Vietnam, according to Mr Hung, the offer will come every hour.

Source: VietnamNet