A critique of proposed amendments to the Electricity Law of Vietnam

Authors: 
David Hall
Authors: 
Steve Thomas
Authors: 
Tue Anh Nguyen
Date: 
Jun 2012

Vietnam’s power sector is dominated by Electricity Vietnam (EVN), which is the integrated state-owned monopoly that covers all elements from generation to retail. It is experiencing a number of serious issues that involve the efficiency of management of EVN, delays in upgrading the transmission/distribution system, and the inability to meet national demand without large-scale imports. The government bodies including MOIT (Ministry of Industry and Trade) and MOF (Ministry of Finance) both believe Vietnam needs to change the current sector arrangements, from price setting, to reorganization of EVN and to overall sector restructuring towards a market-driven system of supply and demand.

In 2011, MOIT put forward proposals to revise the reform roadmap for the sector set out in Electricity Law 2004. A decision on these proposals is not expected until late 2012. The proposal is being questioned on grounds the rationality of bringing forward the introduction of a competitive retail market and on the inflationary effects of the proposed electricity price increases and the degree of efficiency improvement required of EVN.

This paper provides a critique of the impacts of the proposal on Vietnam’s politics and economics and a global review of the electricity liberalization model that underlies such policy.