A lot of work remains to be done in 2013 before energy prices can be fixed properly in line with the development of market economy.
Vietnam’s energy sector has made certain progress in meeting the demands for daily consumption and economic development. As electricity, petroleum, coal, oil, and gas have a direct impact on many other sectors, it is urgent to keep a good balance between supply and demand, imports and exports, consumption needs and reserves for national security.
Last year, the Prime Minister approved a plan to develop Vietnam’s coal sector with a vision to 2020 and even 2030. Nguyen Manh Thang, Director of the Ministry of Industry and Trade’s General Department of Energy says under the plan, synchronized measures will be taken to improve coal transport in northern and southern regions to ensure stable production and supply of electricity across the country.
At the fourth session of the 13th NA, the amended Electricity Law was officially approved with the immediate launch of a competitive power generation market on July 1, 2012 to improve operational and pricing transparency and attracting investment.
The PM also agreed on restructuring energy groups to accelerate the implementation of the National Energy Efficiency Target Programme in the 2012–2015 period.
Shortcomings
The energy sector, in fact, has yet to overcome a number of shortcomings. Coal prices in adjusting and preventing violations of oil and gas trading regulations.
Therefore, Electricity of Vietnam (EVN) managed to make a huge profit last year while other power companies suffered losses.
Vinacomin General Director Ngo Tri Thinh, says his company’s thermal power plants could operate at just 30 percent of capacity and many turbines had to sit idle, causing a loss of several billion dongs.
Dinh Tien Dung, director of the Ministry of Industry and Trade’s Energy Institute says domestic coal production is already beyond limit and it will not last long. The eventual import of coal is being considered as something of a paradox, Dung adds.
Energy prices to follow market trends?
To help the sector iron out snags, the Government has demanded that all energy products follow market trends under state management, economist Nguyen Minh Phong says.
From 2013 to 2015, retail energy prices will be based on actual production costs to keep pace with market competition in the world. Energy price in Vietnam cannot be aberrant in international terms.
2013 is a pivotal year for the implementation of 2011–2015 socioeconomic tasks. Keeping the consumer price index at around 6 percent while increasing the GDP growth rate will require greater efforts on the part of energy managers.
At a conference on the energy sector’s 2013 outlook, Deputy Prime Minister Hoang Trung Hai emphasized the need to put market price mechanisms in place for the virtue of sustainable growth in a competitive manner.
As a point of fact, imported coal costs at least US$150 per tonne, double the export price of domestic coal. And it’s impossible for the electricity sector to import up to 30 million tonnes of coal by 2020 when the average price of electricity still hovers around 7 cents per kWh. There is a plan afoot for the production of liquefied petroleum gas (LPG) at the price of 16 cent per kWh to help ensure energy security in the long run.
By Le My
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