Electricity Equitisation: Opportunities for Foreign Investors

 

Mr Dinh Quang Tri, Vice Chairman of the Electricity of Vietnam (EVN), said raising such a huge amount of capital in Vietnam impossible and this means foreign investors will have many opportunities to invest in the Vietnamese electricity industry. However, it is also not easy to call such a big sum from foreign investors. The electricity industry is attracting foreign capital by issuing bonds, setting up joint venture companies, selling stakes in several hydropower plants, and listing shares of power plants on stock markets, among other solutions. Therefore, foreign investors are provided with various investment forms, not only BOT as now. They can buy stakes of power companies, wholly invest in medium and small power plants, or buy bonds.

 

In March 2007, EVN will sell stakes in Pha Lai Thermal Power Plant, Thac Mo Hydropower Plant and Ninh Binh Thermal Power Plant. When selling stakes, EVN will only keep 51 per cent, offering 40 per cent for outside investors and the remaining for their staff.

 

According to Mr John Davis, senior lawyer of YKVN Law Office, Vietnam now has a good legal framework to attract foreign investors, such as the Law on Electricity, which clearly stipulates the purchase, selling and transmission of electricity. Vietnam also negotiated the construction of new power plants. In the coming time when Vietnam calls independent investors for these projects, this will be good opportunities for foreign investors, because EVN will actively support new independent power plants, John added.

 

Vietnam wants to set up a competitive electricity market as soon as possible to attract more investors, Mr Dinh Quang Tri affirmed. In the initial stage (from now to 2010), the Government will buy electricity from independent power plants at a good price rate. Later, not only the Government but also many companies and even consumers can buy and distribute electricity from power plants. By 2020, Vietnam will have a wholly competitive electricity market.

 

By 2010, EVN targets to become the largest joint stock company in Vietnam with 40-50 affiliates listing stocks on Vietnamese and overseas stock markets. Vietnam also targets to raise total generation capacity of power plants to 17,000-18,000 MW by 2010, including some 40 per cent from hydropower plants and 30 per cent from coal-fuelled power plants. At present, only 30-40 per cent of gas output is used for power generation. Vietnam has, up to now, tapped a third of its proven gas and oil reserves (source: EVN and Shell Companies in Vietnam).