Vietnam Power Industry Update Quarter 2 2012

  • March 2014
  • -
  • Business Monitor International
  • -
  • 68 pages

Includes 3 FREE quarterly updates

BMI View: With our Country Risk analysts projecting that the Vietnamese economy will continue to cool over the coming quarters (we are anticipating a slowdown in real Gross Domestic Product growth – from 5.9% in 2011 to 5.8% in 2012), we see some downside risks emerging for the power segment . That said, our long-term view is unchanged: with Vietnam's Gross Domestic Product expected to grow at an average of 7.15% between 2012 and 2021 it will be a substantial challenge to generate adequate power to support economic expansion.
Most notably, the risk of persistent electricity shortages in the country is very real, as Electricity of Vietnam (EVN)'s negative financial performance and a weak business environment are likely to hinder project development. Despite aggressive measures introduced by the Vietnamese government to cut public spending and address growing concerns over the country's persistent budget deficit, we believe that stubborn global economic headwinds will continue to undermine progress with regard to the country's fiscal position.
Furthermore, cooling external demand is likely to translate into lower manufacturing activity and higher unemployment in the manufacturing segment . Hence, we see growing risks to our short-term projections for power consumption. In addition, we highlight – once again – that financial constraints and impediments to the business environment (poor institutions, a high level of corruption, red tape) are likely to prove an obstacle to project development, leading to substantial delays and possibly derailing some projects, especially those in the nuclear sector .
In spite of this, BMI long-term projections remain sanguine. Power consumption in Vietnam is expected to increase sharply over the coming decade, sustained by solid economic and demographic growth. Total consumption is expected to reach 196.64 terawatt hours (TWh) in 2021, with total power generation growing to 230.21TWh in the same year – to meet soaring demand.
Taking into consideration the trends highlighted above, key themes and developments in Vietnam’s power segment this quarter include:
- In February 2012, Electricity of Vietnam Group in Hanoi (EVN Hanoi) started construction work on 37 power projects. The projects will involve an investment of more than VND50bn (US Dollar 2.4mn) and are indicative of the fact the country is in dire need of new power infrastructure. The Asian Development Bank (ADB) announced in February 2012 that it would provide Vietnam with up to US Dollar 730mn to upgrade its electricity transmission network through to June 2020. BMI believes that this loan could prove crucial in ensuring that Vietnam's power plant projects are able to effectively address the country's electricity shortages. It also highlights the importance of multilateral financial institutions in channelling financing and technical expertise into the critical segments in emerging economies.
- In open contradiction to the global anti-nuclear sentiment that has emerged in the wake of the Fukushima nuclear crisis in Japan, Vietnam signed two key agreements – loan and consultancy agreements – with Russia in November 2011. The agreements were for the construction of the country’s first nuclear power plant, the 2,000 megawatt (MW) Ninh Thuan 1 nuclear project. We note, however, that the Ninh Thuan 1 project is likely to face implementation delays due to a lack of domestic institutional capacity.

Table Of Contents

Executive Summary . 5
Industry SWOT Analysis . 7
Vietnam Power SWOT 7
World Market Overview 8
Regional Market Overview 12

Market Projection Scenario . 17
Vietnam Snapshot (Macro) . 17
Country Snapshot: Economic and Demographic Data . 17
Country Snapshot: Power Segment 17
Vietnam Projection Scenario . 18
Vietnam Projection Scenario . 18
Electricity Generation and Power Generating Capacity . 18
Data : Vietnam Total Electricity Generation Data And Projections, from 2008 to 2016 . 18
Data : Vietnam Total Electricity Generation Data And Long-Term Projections, 2013-2021 20
Data : Vietnam Electricity Generating Capacity Data And Projections, from 2008 to 2016 . 22
Data : Vietnam Electricity Generating Capacity Data And Projections, 2013-2021 . 23
Electricity Consumption 29
Data : Vietnam Total Electricity Consumption Data And Projections, from 2008 to 2016 29
Data : Vietnam Total Electricity Consumption Data And Projections, 2013-2021 29
Transmission and Distribution, Imports and Exports . 31
Data : Vietnam Electric Power Transmission And Distribution Losses Data And Projections, from 2008 to 2016 31
Data : Vietnam Electric Power Transmission And Distribution Losses Data And Projections, 2013-2021 31
Data : Vietnam Trade Data And Projections, from 2008 to 2016 31
Data : Vietnam Trade Data And Projections, 2013-2021 31
Key Policies/Market Structure 33
Regulation and Competition . 33
Sustainable Energy Policies 35
Pricing 36
Key Projects Database 37
Data : Power Plants and Transmission Grids . 37
Power Risk Reward Ratings 43
Asia Regional Power Risk/Reward Ratings 43
Asia Power Risk/Reward Ratings (Scores Out Of 100) . 43
Vietnam’s Power Risk/Reward Ratings . 48
Rewards 48
Risks 48

Competition Overview /Company Monitor . 50
Electricity Of Vietnam (EVN) 50
Glossary of Terms 52
Data : Glossary of Terms 52
Methodology and Sources 53

Market Projection s 53
Power Market - Data Methodology 54
Generation and Consumption Data 54
Electricity Generation Capacity Data . 55
Power Risk/Reward Ratings Methodology 55
Data : Power Risk/Reward Indicators 58
Sources . 59

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