Brian Jeffrey
Update on the Law on Electricity Amendments
The Ministry of Industry and Trade (MOIT) has provided feedback to the National Assembly’s Committee for Science, Technology and the Environment regarding the proposed amendments to the Law on Electricity.
The committee highlighted the importance of carefully evaluating the draft law, suggesting that it undergo discussions in two sessions of the National Assembly: the current eighth session and the subsequent one for final approval.
If the changes are focused on specific urgent issues, the draft law could be approved in the ongoing session. However, this requires that the proposal has been thoroughly prepared by the government, reflecting the input of National Assembly deputies and achieving high consensus during discussions.
MOIT’s report indicates that the draft addresses pressing issues and includes new provisions to tackle urgent problems effectively. The draft’s contents have been extensively evaluated, with particular attention to the potential impact on renewable and new energy sources.
New initiatives, such as offshore wind power and nuclear energy development, have been incorporated, laying out fundamental guidelines appropriate for current conditions while allowing for assessments and improvements in future development projects.
According to MOIT’s projections under the eighth national power development plan (Plan 8), peak capacity is expected to grow by 40,000MW by 2030, reaching an estimated total of 90,000MW, up from 50,000MW by the end of 2024. The division of this capacity includes 20,000MW for the north, 18,000MW for the south, and 2,000MW for the central region.
With such a significant anticipated increase in capacity, MOIT emphasizes the urgent need for a new law to establish a solid legal foundation for electricity development.
The ministry urges the National Assembly to deliberate and approve the draft law within a single session.
Concerns Regarding Electricity Market Regulations
The National Assembly’s Committee on Science, Technology and Environment has raised concerns about a specific provision in the draft law. Point c, Clause 8, Article 5 refers to buyers committing to minimum electricity output, which the committee views as equivalent to an offtake contract.
The committee expressed concerns that this regulation might conflict with competitive market principles outlined in Article 60 of the draft law, which advocates for transparency, equality, fair competition, and non-discrimination within the electricity sector. It aligns with the key objectives of Resolution 55-NQ/TW, aiming to eliminate subsidies, monopolies, and unfair practices in energy supply.
Power plants in the competitive market should be able to set prices freely, competing to sell more electricity while maximizing the benefits of low-cost production sources like hydropower.
If electricity buyers, such as EVN, are mandated to enter long-term contracts to purchase power, it could create financial strain on EVN and hinder market competitiveness.
Consequently, the committee has requested a reevaluation of the proposed commitment scheme.
In response, MOIT clarified that the term “contracted electricity output” is not about physical output but refers to financially committed output as defined in electricity futures contracts, known as Qc.
Moreover, as Vietnam aims to phase out coal power, LNG (Liquefied Natural Gas) is envisioned as a crucial electricity source that supports national energy security and aids the growth of renewable energy. MOIT emphasized that long-term commitments on minimum electricity output for LNG plants are vital for investor confidence, risk management, and securing financing for renewable energy projects, especially given the higher costs associated with LNG projects.
