Vietnam to quicken share sales in EVN in push for wholesale power market by 2017

By    August 16, 2016 | 01:54 pm GMT+7

Vietnam’s sole retail power supplier is going to open up to private and foreign investors.

State utility Vietnam Electricity group (EVN) is quickening its privatization and divestments from non-core businesses as Vietnam moves towards a competitive power sector, including full wholesale and retail competition.

Vietnam’s sole retail power supplier is going to sell shares in three power generation companies, known as Genco 1, 2 and 3, to the public in the next five years, EVN Chairman Duong Quang Thanh said in an interview with the Vietnam News Agency.  

The Vietnamese government in 2007 announced plans to partially sell stakes in most of EVN’s power generation and distribution units.

In 2012, EVN restructured the generation part into the three Gencos. These companies are currently fully controlled by EVN.

According to the Asian Development Bank, as of 2013, EVN owned 22 percent of total installed capacity and the three Gencos held 39 percent. Meanwhile, state-owned companies PetroVietnam and Vinacomin held 16 percent, and plants under the Build-Operate-Transfer (BOT) model and private ownership accounted for another 16 percent. Who held the remaining seven percent is unclear. 

Chairman Thanh said that EVN is ready to accelerate share sales in Genco 3 this year, while Genco 1 and Genco 2 will be privatized in 2017 and 2018 respectively. These companies are expected to be independent from EVN when the competitive wholesale market opens.

Vietnam has already partly opened its power market to foreign players, allowing them to invest in power generation. Official statistics show that in 2013, foreign investments in generation through the BOT model accounted for 6 percent of total installed capacity.

At that time, the government laid out a clear road map for power sector reforms that started with limited competition among selected state-owned generators with a single buyer for power in 2009. This should progress to a competitive wholesale market by 2017, then finally a competitive retail market by 2023.

According to Thanh, EVN will maintain its 100 percent ownership of the National Power Transmission Corporation, which was established in 2008 based on the reorganization of the state utility's four transmission companies and three power grid management units.

Chairman Thanh also said that when the wholesale market becomes fully operational, EVN will stop functioning as the single buyer in the generation market, making power purchases through long-term contracts known as power purchase agreements, or PPAs.

Five power corporations set up within EVN in 2010 will take over the power purchases via PPA contracts.

Since July 2012, the three Gencos, independent power producers and other companies through the BOT model have competed in a pool to sell to a single buyer - the Electricity Power Trading Company - which was set up in 2008 as part of EVN.

The prices of PPA contracts are negotiated between generators and the government, usually the Ministry of Industry and Trade.

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