Brian Jeffrey
An event held on August 20 aimed to address innovative strategies to attract investments in the energy sector.
Nguyen Tien Thoa, Chair of the Vietnam Valuation Association (VVA), expressed concerns about Vietnam’s energy policies lacking clarity and failing to incentivize diverse economic sectors to participate in the energy industry for ensuring national energy security.
Thoa highlighted four primary challenges. Firstly, the absence of market-oriented electricity pricing hinders electricity production and trade efforts.
Reports from 2022-2023 showed a mismanagement policy leading to a loss of VND47.5 trillion, causing financial strains in the power sector.
Secondly, current electricity prices aim to fulfill multiple objectives, needing to cover costs, encourage investments, and not overburden consumers while ensuring social and energy security, a complex balance to achieve.
Thirdly, Vietnam utilizes a cross-subsidy approach in electricity pricing among users, resulting in discrepancies between production costs and selling prices in different regions.
Lastly, there is a lack of distinction between commercial and social welfare pricing.
Hoi identified the core issue in the pricing scheme, stressing the importance of differentiating between public good and commercial operations for a rational pricing mechanism.
While advocating for gradual adjustments to pricing, Hoi cautioned against a sudden elimination of the cross-subsidy system to prevent adverse effects on the national economy.
Hoi emphasized the ongoing importance of coal and gas-fired electricity alongside renewable energy, foreseeing increased electricity prices due to geopolitical tensions and rising material costs.
He expressed skepticism about the affordability of solar and wind power sources based on their limitations and the global energy transition trend.
Nguyen Dinh Tuan, CEO of Son Dong Thermopower, highlighted the gradual phasing out of coal-fired electricity by 2050 under the net-zero initiative, relying on gas-fired and offshore wind power for future energy development.
Tuan underscored the challenges posed by the high costs of renewable energy sources on market prices, potentially impacting EVN prices and government regulations.
He noted the need for adjusting input material mixes as advised by the Ministry of Industry and Trade (MOIT), highlighting concerns over biomass material prices relative to coal prices.
