Private sector is allowed to invest in transmission, renewable electricity must negotiate prices

This viewpoint was clearly stated by the Ministry of Industry and Trade when responding to comments in the summary of comments and acceptance and explanation for the proposal to develop the Electricity Law (amended) sent to the Ministry of Justice.

The state does not have a monopoly on transmission investment.

Giving opinions on the Law drafting dossier, the Ministry of Finance proposed that the Ministry of Industry and Trade study regulations in the direction of clearly defining the scope of state monopoly in the field of power transmission grid and the scope of the private sector allowed to invest while still ensuring to meet the requirements on electricity security and safety.

This aims to promote the attraction of investment resources from economic sectors in accordance with the provisions of the law on investment under the public-private partnership method, reduce investment pressure on State capital while creating consistency and unity with other legal documents.

Private investment in transmission grid.

Citing legal regulations, the Ministry of Industry and Trade said that non-state economic sectors are allowed to operate transmission grids "invested and built by themselves".

"The Electricity Law does not stipulate the scope of state monopoly in investment in transmission grids," the Ministry of Industry and Trade affirmed.

According to this agency, the transmission price factor is the main issue to attract private investors to invest in the transmission grid.

According to the Law on Planning, after the National Power Development Plan is approved, the Ministry of Industry and Trade will prepare a Plan to implement the National Power Development Plan and submit it to the Prime Minister for approval, including identifying a list of projects using public investment capital and projects using capital other than public investment.

Therefore, the Ministry of Industry and Trade believes that not only the transmission grid project but all power projects (including sources and grids) will need to be evaluated based on State resources (through corporations/state-owned enterprises) and other criteria (if any) to determine which projects are implemented by the State or private sector during the planning period to meet the requirements of electricity security and safety.

Renewable electricity must negotiate prices

According to the Ministry of Industry and Trade, the policies/regulations to encourage development applied in the past should only be applied for a certain period of time to support/encourage investment in renewable energy (RE) sources.

In the current context, the price of renewable energy in the world tends to decrease, the scale is expanding, accounting for an increasingly large proportion in the national power source structure, the market for wind power technology and equipment has become more competitive, considering and shifting to a development policy towards market approach is in line with the development trend in the world.

Future renewable energy projects will have to negotiate prices with EVN.

"Continuing support policies is no longer appropriate. Determining the electricity selling price of renewable energy projects will be applied similarly to other electricity projects such as hydropower and thermal power," according to the Ministry of Industry and Trade.

The Ministry of Industry and Trade believes that after the end of the development incentive mechanisms according to the Prime Minister's decisions, transitional wind and solar power projects and future renewable energy projects will also have to follow other mechanisms.

That is, project investors negotiate electricity prices and power purchase contracts with Vietnam Electricity Group (EVN) within the framework of price frames and guidelines issued by the Ministry of Industry and Trade to ensure compliance with the Electricity Law, Price Law and related documents to ensure consistency of the legal corridor.

Cross-subsidy still exists in electricity prices

In the report assessing the impact of the draft Law on Electricity (amended), the Ministry of Industry and Trade acknowledged that there is still cross-subsidy in electricity prices between groups of electricity users (between production and business households, between electricity consumers with the same usage characteristics at different voltage levels, between levels in the household price list); between urban areas and rural areas; between areas connected to the national grid and rural, mountainous, border, and island areas that are not connected to the national grid due to the application of a unified electricity price nationwide.

However, this agency believes that cross-subsidy in electricity prices is necessary to ensure that people in all regions of the country have the right to access and use electricity, improving the quality of life for people in remote, mountainous, and disadvantaged areas.

However, Resolution No. 55-NQ/TW also outlined the national energy development orientation, according to which "there will be no cross-subsidization of electricity prices between customer groups or between regions".

Therefore, the Electricity Law aims to amend and supplement regulations on electricity price policies related to cross-subsidy, thereby gradually reducing and eliminating cross-subsidy between customer groups and between regions.

Changing electricity price management: EVN's concern about losses if A0 buys electricity 'at all costs' A0's departure from EVN to the Ministry of Industry and Trade has urged the reform of the electricity price management mechanism in Vietnam. Otherwise, the existing problems of the electricity industry will be difficult to completely resolve.

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