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8/10/2019 Electric Power Industry Final-jd
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VIETNAM: ELECTRIC POWER INDUSTRY
Presentation for Korean Embassy
May 8 2009
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Presentation Overview
1. Electric power industry structure
2. Vietnams demand for electricity
3. Vietnams supply of electricity
4. Investment in Electric Power Sector
5. Independent power plants
6. Establishment of competitive power market
7. Electric Price Determination Policy
8. Electric network connecting plan between
Vietnam and neighbour countries
9. Projects calling for foreign investment
10. Projects rejected by EVN
11. Best prospects for Korean companies
12. Competitors and Challenges to foreign
suppliers
13. Market entry recommendation
14. Q & A session
2
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1. Electric power industry structure- Management Organization
Proposed Electric Power Industry Organization (Source: EVN) 3
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1
Ministry of Industry and Trade (MOIT): Industry regulator and
policy maker
Vietnam Electricity (EVN): State owned monopoly
EVN: 3th largest SOE in terms of revenue
EVN reports directly to Prime Minister
EVN: Single buyer of electricity from power plants and single
electric transmission body
Industry Legal Framework
Electricity Law 2004
Sixth Power Development Master Plan (Decision 110/2007)
4
1. Electric power industry structure - Management Organization
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1. Electric power industry structureEVN Parent Company
6
i. 3 large hydro-power generation companies;
i. The National Electricity Dispatch Center;
i. The Electricity Information Center;
i. The Electricity Source Project Management Boards;
i. The Management Board of the Executive Center and Electricity Telecoms
Projects; and
i. Most notably, the new to-be-established Electricity Trading Company and Electric
Transmission Corporation
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1. Electric power industry structureEVN Subsidiaries
7
According to the Decision 147, EVN Group includes:
6 one member limited liability enterprises 100% owned by the State;
5 enterprises converted into one member limited liability enterprises in 2006-
2007;
2 one member limited liability companies newly established;
26 enterprises with the EVN Group's stake of more than 50% of charteredcapital;
6 affiliates; and
5 professional units.
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2. Vietnams demand of electricity
8
Electricity production by sources. Source: Electricity of Vietnam www.evn.com.vn (Retrieved September 1st, 008)
Estimated energy consumption in Vietnam
(Exclude nuclear power)
1,925,420
2,729,611
8,834,784
5,163,391
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
2005 2010 2015 2020
Coal Hydro Petroleum Gas Total consumption
Billion BTU- billion British thermal unit
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2. Vietnams demand and supply of electricity
9
Growth rate of electric sector is
equivalent to 2 times of GDP. (GDP
growth 8-9% during 2006-2015)
Actual demand for electricity grew
by 16-17% per year
Generating capacity was 14,000
megawatts (MW) in 2008. In order
to achieve high economic growth,the installed generating capacity
would have to more than double to
26,000 megawatts (MW) by 2010.
Power shortage from 2006 till 2009
Electric production from 2000-2008Bi
kWh
Electricity production by sources. Source: Electricity of Vietnam www.evn.com.vn (Retrieved September 1st, 008)
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2. Vietnams demand of electricity vs power shortage
10
Electricity production by sources. Source: Electricity of Vietnam www.evn.com.vn (Retrieved September 1st, 008)
-
10 0
20 0
30 0
40 0
50 0
60 0
70 080 0
90 0
1,000
1995 2000 2005 2010 2015 2020 2025
Base case
Electricity output Electricity demand (base)
TKwh
-
100
200
300
400
500
600
700
800
900
1,000
1995 2000 2005 2010 2015 2020 2025
High case
Electricity output Electricity demand (high)
T Kwh
As addressed in Decision 110, in the base case, the shortage is 46.3 TWh in 2015 and 159.8
TWh in 2020 and 102.4 TWh in 2015 and 270.8 TWh in 2020, in the high case, alternately.
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3. Vietnams supply of electricity
Power Generation
Total power generation capacity of EVN
generation plants was 71% in 2008 and IPPs
29%
Potential of hydro power in Vietnam 123
billion kWh/year, Hydro plants exploit 50%;
productivity of 66,9 billion kWh/year
Coal, Gas (South) and Hydro (North and
Center) play major roleTrend: Additional 2,700 MW required per year
in period 2006 2010
Trend: Coal expected to rise to 20% of
generation by 2010
12
Hydro Plants
Thermal PlantsImport
Others
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3. Vietnams supply of electricity - Hydropower potential in Vietnam
13
Natural conditions
Area 328.000 km2; 4/5 mountains and highlands
Mean annual rainfall : 2.000 mm
In Vietnam: 2.400 rivers with the length of 10 km and longer
Most of the rivers run into the East Sea with about 870km3 water volume annually (37.500 m3/s in
discharge)
Hydropower potential
Theoretical potential: 300 x109 kWh
- Technical potential: 123 x109 kWh
- Technicaleconomical: 75 80 x109 kWh (1.800 -2.000 MW)
- At present: 20% potential is in utilization (4.200 MW and 18 x109 kWh)
Potential of Small Hydropower 30 MW is about 300 projects (total of 2.000 3.000 MW and 810
x109 kWh)
Pump storaged projects: At present 10 projects are specified with 10.000 MW in which one project1.200MW put in operation in 20182020 an one 1.000 MW in 20202025
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3. Vietnams supply of electricity Hydropower Potential
Hydropower accounts for a large
portion of electricity production.
It is estimated that by 2020, the totalcapacity of hydropower plants shall
reach around 13,000-15,000 MW.
Over the long term, the percentage of
capacity and power generation of
hydropower will decline significantly incomparison with other energy sources.
14
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3. Vietnams supply of electricity
15
Power Transmission & Distribution
In 2006:
500 KV:
220 KV:
110 KV:
Rural electrification rate: 97,26%
of households (Jun. 2008)
Goal: 100% by 2020
Expansion of Transmission &Distribution systems required
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4. Investment in Electric Power Sector
16
Estimated Investment:
US$ 40 billion required until 2015
US$ 30 billion for power generation
US$ 10 billion for Transmission and
Distribution
Expected Sources:
EVNs funds
Equitization of power plants and
power distribution companies. ODA loans
State budget
Commercial loans
Export credit
Private funds (IPP projects)
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5. Independent Power Plant (IPPs)
17
Overview:
IPPs: 29% of total output capacity
IPPs play increasing role
IPPs developed by local and foreign
companies
Two major foreign IPPs:
Phu My 3 (716 MW, Gas, US$ 412 million)
Phu My 2.2 (715 MW, Gas, US$ 410 million)
Active IPP developers: EDF, Sumitomo,
Sojitz, BP, Semcorp, Petrovietnam,
Vinacomin
Large number of upcoming IPP projects PPA with EVN: 4.04.5 US Cent per KWh
Challenges:
Legal and regulatory issues
Lack of transparent competitive market
Access to fuel (gas and coal)
Coordination among government agencies
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Under the Electricity Law, the following factors are used as the
basis to determine electricity prices:
Policies on electricity prices of the Government;
Socio-economic development conditions of the country and the
incomes of citizens in each period;
Relationship between electricity supply and demand;Costs of producing and trading electricity and a reasonable profit
for electricity entities; and
Development level of the electricity market.
7. Electric Price Determination Policy
19
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ERAV is responsible to formulate retail price lists in order for the Minister
of Industry and Trade to consider and submit them to the Prime Minister
for his decision. The retail price lists must be approved by the Prime
Minister.
In general, electricity selling prices to industrial/business users are higher to
cross-subsidize lower prices of residential and rural users. Those high and
low prices are further differentiated depending on the sector and segment of
use, the purpose of use, the voltage of electricity, and the time of day whenthe use occurs (routine hours, low-demand hours, and high-demand hours):
From January 1, 2010 the price of electricity shall be adjusted in
accordance with the market price.
7. Electric Price Determination Policy - Selling Price
20
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The legislation on the topic of electricity prices for sale and purchases by EVN from
generation plants is Decision No. 2014/QD-BCN dated June 13, 2007 of the MOI (now is
MOIT) temporarily providing the guidelines on the contents of economic analysis, investment
finance and electricity price brackets of electricity projects (Decision 2014):
Decision 2014 provides the guidelines on the calculation and analysis of economic and
investment finance and the electricity price brackets applicable to investment projects for
electricity sources, aimed to form a foundation for negotiation of power purchase
agreements (PPA), to unify methodologies and ensure the selection of effective
investment projects.
Decision 2014 is applicable to the entities and individual investing into the projects on
electricity sources. In case of differences with the provisions on methods and figures
used in calculation, during the project appraisal, approval and PPA negotiation project
investors shall attach explanations.
7. Electric Price Determination Policy - Purchasing Price
21
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8. Electric network connection plan between Vietnam and neighbor countries
23
2. With Cambodia
Period 20082010: Power supply from Vietnam to Cambodia with 150 - 200MW
by 220kV from Chau Doc to Ta Keo and Phnom Penh
Period 20152016: in case of Lower Se San & Lower Serepok Hydropower Plants
(430MW) in Cambodia will be built, energy will be supplied to Ho Chi Minh City
3. With China
In 2006 import 250-300MW via 220kV Lao CaiYen BaiViet Tri
In 2007 import 250-300MW via 220kV Ha GiangThai Nguyen
Plan to import 1500MW in period of 2006-2018 by 500/220kV from Hong Ha to
Soc Son
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1
24
9. Projects calling for investment (Decision 110)
No. Project Name Location Investment Form
1. Power Turbine Plant. Can Tho BOT, BOO
2. Power Turbine Plant. Southern Vietnam. BOT, BOO
3. Nghi Son II Coal Power Plant. Thanh Hoa. BOT
4. Kien Giang I Coal Thermal Plant. Kien Giang. BOT, BOO
5. Son My Coal Fired Plant. Binh Thuan. BOT, BOO
6. Kien Giang II Coal Power Plant. Kien Giang BOT, BOO
7.Plant producing power transmission
transformers
Hai Phong, Quang Ninh,
and other localities with
the right condition.
JV, 100% FOC
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In August, 2008, EVN has decided to return 13 electric power projects
which were assigned by the Government. Official Letter No.
7469/VPCP-KTN of the Government Office on disposition of 13
projects as follows:
EVN will undertake:
Duyen Hai 1(in Tra Vinh Province) which has the capacity of 2 x 600MW
Vinh Tan 2(Binh Thuan province) which has the designed capacity of 2 x 600MW.
Malaysias Janakusa Group:
Duyen Hai 2(in Tra Vinh Province) which has the capacity of 2 x 600MW
China Southern Power Grid:
Vinh Tan 1(in Binh Thuan province) which has the capacity of 2 x 600MW
The Vietnam National Oil and Gas Group (PetroVietnam) Long Phu 1(in Soc Trang Province) which has the capacity of 2 x 600MW
9. Projects rejected by EVN
EVN usually complaint of capital lacking
25
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Lilama Corporation
Vung Ang 1(in Ha Tinh province) which has the capacity of 2 x 600MW
Vietnam Coal and Mineral Industries (Vinacomin)
Hai Phong 3 which has the capacity of 2 x 600MW
Group of contractors, including EVN and One Energy and Pacific CorporationG
Vinh Tan 3(in Binh Thuan province) which has the capacity of 2 x 1000MW
The group of Lilama, REE, and One Energy
Vung Ang 2 which has the capacity of 2 x 600MW
Three projects are still under consideration: Duyen Hai 3, Long Phu 2, Long Phu 3
Two projects are being preparing for international bidding:
Vung Ang 3 thermo powers plants
Quang Trachthermo powers plants
9. Projects rejected by EVN
26
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10. Best prospects for Korean companies
2
27
Best prospects:
Consulting and engineering services for
thermal power plants
Equipment for thermal power plants
Spare parts and overhaul services for thermalpower plants
Investment in IPP projects/upgrade existing
electric power plants projects
Participate in O&M contract
Prospective buyers:
Foreign IPP developers
Coal and gas fired project developers
Foreign contractors (Chinese, Japanese,
French and German)
Vietnamese contractors
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11. Competitors and Challenges to Foreign Suppliers
28
Competitors:
Equipment: US, Chinese, Japanese,
Thai and European
Services: Chinese, Japanese and
European
Challenges:
Project delay
Red-tape and lack of transparency
Complicated bidding procedures
Corruption Flexibility and adaptability to local
business environment
Price competition
Finding good local partners
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14. Q & A session
29
THANK YOU
FOR YOUR ATTENTION!