Vietnam electricity reform has created opportunities for foreign investment

Vietnam’s amended law on electricity allows foreign investment in the country’s electricity grid to improve energy quality and capacity. By 2030, the country’s electricity consumption is projected to grow at an annual rate of 10-12 percent, representing the fastest growth rate in Asia.

For example, early entrants to the construction, operation and operation of Vietnam’s electric grid will have the advantage of being a trusted partner as opportunities in Vietnam’s energy sector increase.

Private investors can now build, operate and operate the power grid in Vietnam following recent legal amendments, as the state of Vietnam gradually loses its control over the sector.

On January 11, 2022, the National Assembly of Vietnam passed Act No. 03/2022 / QH15, which contains amendments to the 2004 Electricity Act. The law is the main law in Vietnam that governs the power sector and includes regulations governing investment, markets, and pricing. , And licensing, among other terms.

The amendments, which went into effect on March 1, 2022, increased the capacity of private investors to participate in Vietnam’s electricity grid, reducing the role of the state. The reform comes under pressure to improve the quality and capacity of Vietnam’s electrical grid, including the adoption of renewable technology.

The amendments to Section 4 of the Act raise concerns about where private investors can and cannot invest. With the change, private investors will be able to:

Accordingly, private investors can now create new sections of the electrical grid and operate those sections without the direct involvement of the state.

Further, in accordance with the amended paragraph 4, the State of Vietnam retains its exclusive rights:

The amendments maintain the exclusive dominance of the state of Vietnam over the construction, operation and operation of the national power grid system and certain large power plants. However, the new paragraph 4 explicitly restricts the State from operating parts of grids built and operated by private investors.

In light of the amendments, there are more opportunities for foreign companies to invest in Vietnam’s electricity grid and contribute to improving the sector’s infrastructure. Currently, Vietnam Electricity (EVN), a state-owned company, is the largest buyer of electricity in Vietnam. Until the amendment, EVNs were exclusive in the transmission and distribution of electricity.

Rapid economic growth, growing investment in manufacturing and industry, and growing middle class have given rise to unprecedented demand for electricity. The Vietnamese government plans to increase electricity consumption by 10-12 percent per year until 2030, which represents the fastest growth rate in Asia.

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This article was first published by AseanBriefing which is produced by Dejan Veins & Associates. The company supports foreign investors across Asia from the office Around the worldIncluding China, Hong Kong, Vietnam, Singapore, IndiaAnd Russia. Readers can write [email protected]

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