During the past 15 years, the electricity price has increased by 1.7 times. After being allowed to raise the electricity price, EVN basically eased the imminent worrisome but the investment capital for the group's power projects could not rely on price increase only, he added.

Do Huu Hao, vice minister of Industry and Trade assessed that from now until 2015, there will be shortage of power because the entire output of electricity will be consumed and the electricity reserve will run out because of the electricity shortage and the tardiness in power construction projects.

Since 1980, there have been six big electricity development projects but the implementation progress of these projects has been delayed.

In an independent study on the effects of electricity price increase, the specialist group of Hanoi National University's Centre of Economic and Policy Research (CEPR) pointed out that in order to avoid the pressure of electricity price increase, the supply needs to be improved through raising capacity and expanding the scope of power plants.

According to the analysis of Dr Nguyen Duc Thanh—head of the research group, in terms of technique, a rise in capacity will pull down prices. It is supposed that EVN's capacity only rises by 0.5% a year, then electricity price will surge 23%. But if the capacity increases by 20% a year, the electricity selling price could be reduced by 2%.

Production monopoly will lead to the monopoly in consumption. EVN dominates the country's electricity market with 74% of production, 100% of transmission, and 95% of distribution. According to the analysts there should be separate production phase, in which only EVN is allowed to hold 20-30% of electricity production output and manage transmission phase while the distribution should be separated from production. Power plants will have to pay transmission costs and have a right to select consumers. Its is necessary to re-consider the current structure of electricity sector in the general development tendency. Factually, up to 33.96% of electricity output comes from hydropower, 33.6% from natural gas power, 17.17% from coal-fed thermo power plants, and 3.73% from oil power.

Cost for hydropower investment is the cheapest but the kind of electricity production depends heavily on weather.

Yet, the monopoly problem in the electricity sector is very difficult to solve. According to Dr Nguyen Duc Thanh, while not having capital to build new plants, businesses can improve generation process of the available plants and reduce electricity loss along with the cost saving.

Pham Le Thanh, general director of EVN said that to overcome current problems, EVN will prepare an electricity supply plans for the dry season and for the whole year of 2009 with a goal to cut down the electricity loss ratio to 8.85%.

Nguoi Lao Dong - February 25, 2009