A major turning point to ensure transparent competition in electricity

Construction of offshore wind power project at the Center for Energy Industry and Technical Logistics (Vietnam Oil and Gas Technical Services Corporation). *Photo: Minh Ngoc*

Maximize investment capital

If in the past, state-owned corporations in essential energy sectors such as Vietnam National Oil and Gas Group (PVN), Vietnam Electricity Group (EVN), Vietnam National Coal and Mineral Industries Group ... were considered the only "backbone", up to now, Resolution No. 70-NQ/TU has required the completion of financial policies towards mobilizing maximum private investment capital and foreign investment in projects in the energy sector in the form of independent investors or public-private partnerships (PPP).

The resolution also creates a legal corridor to improve financial, tax, and preferential credit policies to encourage businesses and people to participate in investing in developing small and medium-sized renewable energy projects, projects that both produce and consume energy. Private enterprises are encouraged to participate in investment projects in energy storage infrastructure such as storage batteries, LNG warehouses, gasoline and oil warehouses on land and at sea, and investing in developing the power transmission grid, etc.

Dr. Ngo Duc Lam, former Deputy Director of the Institute of Energy, said that Resolution No. 70-NQ/TU has provided long-term orientation, going straight to the practical and urgent issues that the energy sector, including the electricity market, is facing, helping to remove the major "bottlenecks" that are being encountered. That is, to meet the target of double-digit economic growth in the next decade, Vietnam will need a huge capital source of about 200 billion USD for energy development, meaning that on average, about 20 billion USD must be mobilized each year. Creating conditions for many economic sectors to participate will help reduce pressure on the state budget, while ensuring long-term energy security. The national power development plan for the 2021-2030 period, with a vision to 2050 (Power Plan VIII), which has just been adjusted, is also based on the spirit of promoting and encouraging the diversification of investment components. The Ministry of Industry and Trade has issued a list of energy projects to call for socialized investment and the authority to implement them is the People's Committees of provinces and cities. Based on the list, the announcement and invitation to bid for investment in these energy projects will be carried out in accordance with the bidding regulations on investment and land.

“Investment resources from the state-owned enterprise sector are limited, while most of the investment demand depends on the private sector. If we cannot create appropriate motivation and mechanisms for the private sector to confidently invest, the risk of not achieving the goals in implementing the adjusted Power Plan VIII is completely possible,” said Ha Dang Son, Director of the Center for Energy Research and Green Growth, Energy Market (Ministry of Industry and Trade).

Transparency and stability in pricing mechanism

After the Politburo announced Resolution No. 70-NQ/TU, the Ministry of Industry and Trade demonstrated the spirit of "doing it now, doing it right away" by organizing a conference to implement it. This drastic action shows the high determination of the entire industry in bringing this important resolution into life.

Deputy Minister of Industry and Trade Nguyen Hoang Long said that by 2025, Vietnam's power system will have risen to lead ASEAN in total installed capacity, with an expected scale of over 90,000 MW, and will be among the top 20 countries in the world. However, there are also limitations and shortcomings that need to be overcome. To meet the high growth requirements, the energy sector, especially the electricity sector, needs to break through one step ahead, creating a solid foundation for socio-economic development.

From a business perspective, General Director of Vietnam Electricity Group (EVN) Nguyen Anh Tuan assessed that Resolution No. 70-NQ/TU sets out major and comprehensive orientations, creating a basis for units within the Ministry of Industry and Trade, corporations, general companies and energy enterprises to implement specific action plans. EVN has proactively assigned functional departments to develop programs and action plans to concretize the spirit of the resolution.

Meanwhile, expert Phan Duc Hieu, member of the National Assembly's Economic and Financial Committee, said that it is necessary to ensure transparency and stability in the electricity price mechanism. Because electricity is an essential input for production and business activities. Therefore, if we build an electricity market that is too attractive, with too high profits, turning electricity into a mere investment channel to attract capital, it is very likely to push up production costs, negatively affecting the economy. Thus, the requirement is to create an electricity market that is attractive enough to attract investment, but at the same time must be kept at a reasonable level, ensuring a stable and clean electricity supply, serving production development and life, without putting too much pressure on input costs.

In addition, to attract investment in the electricity industry, it is necessary to systematize and specify regulations, contributing to creating stability and transparency for the market. If investors do not have a clear legal framework, do not understand the production and business plan, input and output costs and total investment, they will not be able to participate with confidence.

Source: https://hanoimoi.vn/buoc-ngoat-lon-bao-dam-canh-tranh-minh-bach-ve-dien-715492.html