VietNamNet Bridge – Capital demand for building infrastructure of the electricity industry is increasing, but the industry still has difficulty in gaining access to it, stated Electricity of Viet Nam (EVN).

The industry needs a total investment of US$123.8 billion for the period 2011-30, $48.8 billion for 2011-20, and $75 billion for 2021-30.

According to the national electricity development plan for the period 2011-20, created by the Energy Institute under the Ministry of Industry and Trade, extended to consider the period up to 2030 as well, the industry needs a total investment of US$123.8 billion for the period 2011-30, $48.8 billion for 2011-20, and $75 billion for 2021-30.

However, according to the latest calculations by the institute, the demand for capital for a power grid is on the rise because some electricity projects under the plan require more capital for the development to meet the demand for electricity in Ha Noi, HCM City, and for the 500-KV north-south electricity network.

In addition, the increase in compensation for site clearances compared with the expected compensation in the plan has also driven up the need for capital among these projects.

The institute noted that in the coming years, the industry will face many problems with power grids, including overloads in Ha Noi and HCM City.

EVN, quoted by the Nguoi Lao Dong (The Labourers) newspaper, pointed out that the southern region needs 10,000MW of electricity, but the capacity in the area has only reached 8,000MW, and the remaining 2,000MW has to be transmitted from the north.

If the demand for electricity in the south continues to increase this year, the industry is sure to buy more electricity from other sources at high prices, EVN stated.

Under the plan, EVN is scheduled to invest in and operate 16 electricity projects, with a total capacity of 9,738MW during the period 2011-15. In fact, EVN has already invested in and operates 10 projects, with a total capacity of 4,838MW; within the next two years, it will develop the remaining six projects.

Tran Dinh Long, deputy chairman of the Viet Nam Electricity Association, claimed that in developed countries, electricity companies can contribute 40-50 per cent of the project capital on their own, while the remaining 50-60 per cent of the project capital must come from loans.

In Viet Nam, EVN has had difficulty in getting capital for electricity projects because it can contribute 20-30 per cent of the project capital on its own, Long remarked.

Nguyen Minh Due, member of the association's executive board, noted that to produce the necessary capital, EVN should slash production costs, increase revenue and take loans. However, increasing revenue by driving up electricity prices could prove an impossible task, while getting foreign loans approved may be difficult.

Meanwhile, many experts have said that the industry has complained of a lack of capital for developing its electricity projects, when in fact, the industry has not used its capital efficiently. It has channelled a large amount of capital into non-core businesses.

Therefore, the state should ensure EVN's use of this capital is efficient, added economic expert Ngo Tri Long.

Source: VNS