The failure of the power development program for the 2006-2010 period (The 6th development plan) showed that Vietnam lacks electricity not only because it lacks capital or because of prolonged droughts. It is imperative to reconsider the efficiency of investments in the power sector.
While the cement and steel development programs are facing difficulties because of too many projects, the power development program is failing because of short supply.
According to Dr. Tran Dinh Long, Deputy Chair of the Vietnam Power Association, the 6th development program is halfway done with only 63-64 percent of the work volume in power network and only 70 percent of the work volume in power generation fulfilled.
The Ministry of Industry and Trade has begun drawing up the seventh development program. However, the problem is that there is still no general overview about the damages caused by the failure of the sixth development program..
The latest updated report by the management board for the sixth development program showed that there are 42 power plants, including hydropower and thermopower plants which are scheduled to be put into operation in 2010-2012, of which 28 plants are going to be late by one or two years.
The power plants which have become most famous for tardiness include Quang Ninh 1 and Hai Phong 1, financed by the Electricity of Vietnam. Both the power plants were late for 27 months. Another typical example is Song Dong thermopower plant (2x110 MW), financed by the Vietnam Coal and Mining Industries Group Vincomin. The power plant was first scheduled to be operational in 2008, but it only could become operation in the second quarter of 2010. The Cam Pha thermopower plant was also one year late and began generating power in 2010 instead of 2009.
In 2011, Vietnam plans to put 18 power plants into operation which have the total capacity of 4585 MW. However, of these 18 plants, 10 plants with the capacity of 1705 MW should have begun generating power in 2009 or 2010.
The same report shows that eight power plants with the total capacity of 3410 MW, which should have begun generating power in 2010 or 2011, surely cannot fulfill the plan, and they will only be able to begin generating power in 2012, at the earliest. These include Quang Ninh 2 power plant (2 x 300MW), Hai Phong 2 (2 x300MW), Khe Bo hydropower plant 50MW, A Luoi hydropower plant 2 x 85MW, Mao Khe thermopower (2 x 220MW), and Vung Ang thermopower (2 x 600MW).
According to Dr. Long, every power plant can run 6000 hours per annum. A 300MW power plant has an electricity output of 1.8 KHW per annum. As such, when a 300 MW power plant is late by one year, the national grid will lose the opportunity to get 1.8 billion KWH of electricity.
If applying the calculation method of Long, the delay of the electricity generation plan of eight 300MW power plants will lead to a loss of 20.46 billion KHW. If noting that Vietnam needs 115 billion KWH of electricity in 2011, the figure would account for 20 percent.
Nowadays, information about delays in the construction of power plants does not surprise anyone, because tardiness is considered the innate characteristic of the power sector.
When explaining the serious electricity shortage, leaders of the Ministry of Industry and Trade and the Electricity of Vietnam always attribute it to two factors – the droughts, an inevitable factor, and the lack of capital – the common problem of all business fields of the national economy. No one has taken responsibility for the failure of the sixth development plan.
Meanwhile, Tran Viet Ngai, Chair of the Energy Association, has pointed out that one of the reasons behind the tardiness in the implementation of power projects is the problem with choosing contractors. Most of the thermo power projects in the sixth development program, in which Chinese enterprises act as general contractors, have seen troubles. For a long time, when selecting contractors, Vietnamese investors always prioritized the contractors who offer lowest prices. However, the principle proves to be a big blunder in the investment development policy of the power sector.