Under the roadmap guided by the Government, the competitive power market will be piloted in 2009 and a retail competitive power market should be in place by 2010. Reasonable prices in a competitive power market will be expected by consumers after the targeted schedule is achieved. However, will consumers really enjoy low pricse in such a competitive market?
Prices will struggle to go down
At present, the price of power is more or less subsidised by the Government. Once libralisation is completed, consumers shall bear all the input costs from the cost of producing the power to transmission and distribution, the price therefore will unavoidably rocket up. Moreover, this is a reasonable worry as the power market will be cutthroat once it is libralised.
According to Mr Dang Hung, former Director of Vietnam&rsquos Electricity Regulatory Authority, this model will up the electricity market however, such libralisation is two-sided and may pose huge difficulties for managers. On the other hand, it is needed in order to adjust power prices due to the high global price and once Vietnam&rsquos power marker is libralised, consumers will bear the brunt of any expiture..
Consumers should not have high hopes for lower power prices in the competitive market, because any price reductions will dep on the world price, said Mr Hung. &ldquoIf a positive competitive model is applied, consumers may then enjoy lower prices&rdquo.
Consumers should enjoy reduced prices, however, many power producers and distributors are worried about the fact that investment in the power industry may fall off at that time, thus leading to a shortage of power. On the other hand, if prices get too high, consumers will not be able to afford to pay for their power and the competitiveness of Vietnamese products will be considerably damaged. It is not easy to balance these two objectives.
While power prices are currently &ldquoregulated&rdquo by the EVN, consumers hope that the participation of many more power producers and distributors in a free competitive market will produce the most competitive price. Anyway, the most competitive price does not always mean the lowest price.
Prices cannot be equal across the regions
In theory, the introduction of a competitive power market should reduce prices, which is beneficial for customers. The power price is currently determined differently in specific regions and sectors. However, consultants believe that it makes good sense for Vietnam to apply a common price across the country. Would such a move put part of the population at a disadvantage because of the difference in power prices or will some regions have to &ldquobear&rdquo extra costs and effectively subsidise other regions?
On explaining this situation, Mr Hung said: It is advisory for Vietnam to apply a common price if there is no transmission limit, in other words, the country&rsquos electricity network is considered an entity unto itself and not just a regional provider.
This means that in cases where the power supply in the North outstrips demand, while the power supply in the South is poor and transmission fails, the price of power shall be determined differently in each region. However if the transmission is power is comprehensive , a common price would be applied to every region. &ldquoWhether a common price is applied or not shall dep on our transmission capacity in the future&rdquo- said Mr Hung.
So far, policy makers seem reluctant to the most sui market model. In the latest meeting between consultants and the Electricity Regulatory Authority of Vietnam, the &ldquocost-based&rdquo model was the most popular. However, as Mr Hung argued, the libralisation of the power market would be regulated by the State who could introduce certain measures to determine an &ldquoaccep&rdquo price for consumers.
Huong Ly
Vietnamese
