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Electricity sector needs restructuring, say experts  (05/03/2009) 
Electricity of Vietnam Group, or EVN, should be organized into separate power production, transmission and purchasing entities if the country’s electricity industry wants to see strong development, according to economic experts.

Those experts said that it is time for the country’s electricity industry to be more competitive, open and transparent or else fail under EVN.

“The problem is EVN should accept a reorganization for a transparent mechanism in electricity transmission as well as competitive purchasing from private electricity producers,” said Le Dang Doanh, a high-profile economic expert.

Doanh said the independent investors in electricity production have been obstructed due to low electricity prices that were constrained by EVN.

The industry ministry suggested removing the production and transmission phase out of the control of EVN and establishing five independent power companies to improve competitiveness.

EVN has opposed this, arguing that restructuring may reduce EVN’s control of the power industry and have a bad effect on national energy security. The total output capacity of the country is 15,000 megawatts with 60% of it controlled by EVN.

“Though EVN disagrees with the ministry’s proposal, I myself support the proposal because I know some independent power producers were discouraged by EVN’s price constraint,” Doanh told the Daily.

He said developed countries had been successful in energy security by creating competitive and open power markets and went on to say that EVN’s monopoly was not good for industry development.

EVN claims losses for its subsidiaries every year and asks for more capital to invest into potential power projects while people suffer through rampant power cuts.

According to the Government, EVN has been buying power at between 7 and 11 cents per kilowatt hour, then selling it on to rural areas at 2.3 cents per kilowatt hour, so it cost the power giant over VND6 trillion in power subsidies last year.

Pham Chi Lan, an economic expert, told the Daily that the two basic difficulties for the country’s electricity industry were an insufficient power supply source and EVN’s unimproved services, difficulties which she said could be solved if the proposal of the industry ministry is approved.

“An exclusive mechanism in the power industry governed by EVN will be unfavorable to both private power producers and consumers,” she said.

Lan gave as an example the indifference shown by EVN to consumers when it buys low priced power from independent producers while slow deployment of its many projects causes sudden power cuts.

The economic experts also said EVN’s project investment orientation is not balanced. For instance, total power generation capacity reaches 15,000 megawatts but the transmission capacity is only 14,000 megawatts.

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