As a growing economy, Vietnam has already conducted three reforms in its power sector: 1) in 1995 when Electricity of Vietnam (EVN) was established; 2) in the period of 2003-2007 when EVN was restructured; and 3) in 2012 when the Vietnam Competitive Generation Market (VCGM) was officially started (ADB, 2015; Nguyen A.T.,2012). Before 1995, Vietnam’s power sector was regulated by Ministry of Energy (the energy sector is now under Ministry of Trade and Industry), and managed by three power companies that are responsible for generation, transmission, and distribution, respectively. In the first reform, Vietnam established EVN as the only power company. During the following period, Vietnam’s power sector structure followed a vertically integrated utility (VIU) model where EVN was the decision-maker for the entire power sector in Vietnam.
In the next reform in 2003, the partial restructuring of EVN was started with the identification of several generations and distribution assets in EVN that referred to equitisation (ADB, 2015). Equitisation in Vietnam is a process of transforming a state-owned enterprise into a joint-stock company, and it is considered partial privatisation (Nguyen A.T., 2012).
Afterwards, the EVN was officially converted into a holding company with a number of strategic business units in June 2006. The enforcement of Vietnam’s Electricity Law 2004 that regulated two schemes namely build-operate-transfer (BOT) and independent power producer (IPP), initiated the restructuring of EVN to encourage private’s participation.
In 2007, the government approved the equitisation plan to privatise EVN by keeping more than 50% of share capital from EVN (Nguyen A.T., 2012). In 2012, through the Vietnam competitive generation market (VCGM), the government officially established a cost-based pool model in Vietnam’s power sector. In 2015, a pilot project of Vietnam Whole Electricity Market (VWEM) was started. (Cuong D. M., 2016)
As the initial steps toward the creation of a competitive electricity market, the Government of Vietnam established a roadmap of competitive power market development in 2006. In this version, the roadmap consisted of three development stages: 1) competitive generation market (2009); 2) wholesale competitive market creation (2014); and 3) competitive retail market (2022). This roadmap was revised as per Decision 63/2013/QD-TTg dated on 8 November 2013 (see Figure 1).
The phases of the Power Sector Reform Road Map are as follows:
1. Phase 1 (Up to 2014): Competitive Generation Power Market
a. Pilot VCGM was launched on July 1, 2011
b. Full VCGM was launched on July 1, 2012
c. Implementation of the Single Buyer (SB) and the competitive power market.
2. Phase 2 (2015–2021): Competitive Wholesale Power Market
a. Expand demand-side participation in the organised power market by replacing the SB model with an arrangement whereby consumers may negotiate direct purchases of power independent of the SB.
b. VWEM’s Conceptual Design was completed (see Figure 2) and approved by the Ministry of Industry and Trade in 2014 (Decision 6463/QD-BCT dated 22 July 2014).
c. VWEM’s Detailed Design was completed and approved by the Ministry of Industry and Trade in 2015 (Decision 8266/QD-BCT dated 10 August 2015).
d. VWEM Rules were ongoing. Based on Asia Development Bank (ADB)’s Technical Assistance Report (2014), ADB would support the Wholesale Electricity Market via ADB Technical Assistance, with total financial support of US$0.75 million approved as of December 2014 for the following:
i. Pilot stage (2015–2019). In 2015–2017, power corporations were to participate directly in the electricity market, and in 2017–2019, competitiveness will be increased with eligible large consumers and new wholesalers entering the market.
ii. Full implementation stage (2019–2021). This stage will see increasing competitiveness and full implementation of electricity market mechanisms.
3. Phase 3 (from 2021, full operation by 2023): Competitive Retail Power Market
In this phase, distribution company activities are split into: (i) network management and operation; and (ii) retailing to end-users, giving end-users the freedom to choose their suppliers. (ADB, 2015; Cuong D. M., 2016)
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