Written by: Karim Hammam
Vietnam's Ministry of Industry and Trade has submitted a draft law to the National Assembly aimed at amending and supplementing articles of the current Electricity Law, in a move to modernize the sector and ensure energy supply security. The project, whose details were presented by the Minister of Industry and Trade, Le Man Hung, seeks to introduce radical changes to electricity pricing mechanisms, including the application of variable prices for residential consumers based on peak and off-peak periods, in addition to calculating consumption on an hourly basis when technical conditions permit.
Objectives of the Legislative Amendments
These legal moves come within the framework of the Vietnamese government's efforts to remove institutional obstacles that hinder the development of a competitive and transparent electricity market. The proposed amendments include simplifying administrative procedures, delegating more powers, and developing specific mechanisms for renewable energy, offshore wind energy, and electricity storage systems. The new law also aims to stimulate investment in transmission networks through public-private partnerships, while reducing reliance on cross-subsidies between consumer groups, aiming for their gradual elimination.
Reviewing Pricing Mechanisms and Transparency
For his part, the Chairman of the Committee for Science, Technology and Environment, Nguyen Thanh Hai, stressed the importance of a comprehensive review of the proposed policies to ensure their consistency with economic and social goals. He emphasized the need for electricity prices to reflect the true and legitimate costs of investment and operation, while warning against shifting the financial risks of projects to the state or consumers. The regulatory body also stressed the importance of setting a clear roadmap for eliminating cross-subsidies, while maintaining direct support programs for poor households and the most needy groups, and ensuring that resources are allocated with absolute transparency.
The Vietnamese government is moving towards enhancing the efficiency of the energy market by linking sales prices to the actual cost of production, while emphasizing that power purchase agreements must be based on competitive and fair foundations, which enhances the sector's attractiveness to local and international investors and ensures the sustainability of electricity supplies in the long term in light of the accelerated economic growth that the country is witnessing.
