part 1: overview of cogeneration and its status in asia - Fire

162 Part3: Summary of country studies – Bangladesh and Viet Nam
4.1.2 Status and future prospect of electricity demand and supply
Electricity shortage is now a big problem in the power sector. Many industrial consumers
have prepared themselves for power interruptions with stand-by self-generating units; in
some cases, even independent power plants have been commissioned for big industrial
consumers such as centralized industrial zones (CIZ) or export processing zones (EPZ).
In the period up to 2010, new power plants will be of different types in each region: coal (and
hydro) in the North, gas (combined cycle) in the South, and hydro in the Central region. To
alleviate the burden of investment capital on the government, the two considered ways are
purchasing electricity from independent power producers (IPP) or using electricity from Build-
Operate-Transfer (BOT) schemes.
Despite efforts by the Government, according to a prediction made by the Electricity of Viet
Nam (EVN), a serious electricity shortage, estimated to range from 400 GWh to 1 TWh, will
take place in 1999 in Viet Nam. The EVN planned to buy approximately 100 GWh of electricity
from industrial factories as well as centralized industrial parks (CIP) or industrial processing
zones (IPZ). Thus, the capacity deficit could be estimated as between 200 and 500 MW.
4.1.3 Prevailing Costs of Energy
In Viet Nam, the prices of coal and electricity have been lower than their costs of production,
mainly due to the subsidy extended by the government.
The government has followed a strategy of fixing maximum bulk and retail prices of oil and oil
products on the basis of CIF cost of imported products, plus a distribution margin and taxes.
Oil and oil products prices depend strongly on the exchange rate variation.
The retail price of electricity in industry has been adjusted recently with the introduction of the
Value Added Tax (VAT) from January 1999 (see Table 4.1). However, the electricity tariff
applied to foreign companies is higher, US$0.11/kWh. The capacity charge is so far not
applied in Viet Nam although there is a registered capacity charge for big industrial
consumers. The factory should not have a greater demand than the registered capacity
during the peak period to avoid any power cut-off.
The time-of-day tariff has just been introduced in the industry and commercial sector in Viet
Nam but is not widely practised. Before January 1999, the price of electricity during the utility
peak period was double that of the normal period whereas the price during off-peak period
was 25 per cent lower than that of the normal period. However, with the introduction of VAT,
the new time-of-day tariff is being adjusted and the power company EVN has yet to make a
clear announcement.
Table 4.1 Electricity tariff before and after introduction of VAT
Price before VAT Price after VAT Price of 1998
VND/kWh* VND/kWh VND/kWh
1. Normal period (110 kV) 636 699.6 700
2. Normal period (20 kV to