World Bank says private capital key to Vietnam’s energy needs

In the report titled "Maximizing Finance for Development in Vietnam’s energy sector" issued Monday, the bank called for a new approach to financing electricity and gas investments to fit the country’s changing macroeconomic and sectoral contexts.

"Given the limited fiscal space (official developmental assistance capital) and the reduction of concessional financing available going forward (due to Vietnam’s recent middle-income status), it will be important for Vietnam to step up mobilizing alternative capital resources for the electricity and gas sectors," Ousmane Dione, the bank’s country director for Vietnam, said .

The Government should comprehensively address the constraints currently impeding the flows of domestic and cross-border private capital into two of the most strategic segments of the Vietnamese economy, electricity and gas, he added.

Franz Gerner, the World Bank’s lead energy economist, said: "We observe a large interest from private investors to participate in the vast growing energy market in Vietnam, especially in renewables and LNG development."

"They are willing to invest as long as the projects are well-structured and bankable," he said. "What investors need is a transparent and stable regulatory environment which incorporates a proper risk-sharing mechanism among all parties."

Vietnam’s electricity sector would require on average $10 billion annually frontloaded through 2030, higher than the average of $8 billion in 2011–15, according to the bank.

The envisaged expansion of the gas sector requires total investment of around $20 billion between 2015 and 2035.