Trung Nguyen Coffee

1. The introduction
* Name:
– Full name: Vietnam Electricity Group.
– International name: Vietnam Electricity.
– Abbreviation: EVN.
* Establishment:
– Date: 10/10/1994.
– Founder: Vietnam government.
– Headquarts: 18 Tran Nguyen Hoan, Ly Thai To, Hoan Kiem, Ha Noi. * Logo:

* Company:
_ General Corporation of Electric: 5 corporations
+ Northern Power Corporation (EVN NPC)
+ Southern Power Corporation (EVN SPC)
+ Central Power Corporation (EVN CPC)
+ Power Corporation of Hanoi (EVN HANOI)
+ Power Corporation of Ho Chi Minh City (EVN HCMC)

_ Members Companies:
+ NPT (National Power Transmission Corporation)
+ Hoa Binh hydroelectric plant
+ University of Electric Power
+ Ho Chi Minh city College of Electric Power
+ College of Central Electricity
* Contact:
– Phone: (84-4) 2.2201371.
– Fax: (84-4) 2.2201369.
– Website: www.evn.com.vn
2. Activities
+ Fields of business: Production, transmission and export power. + Other sectors:
• Education: University of Electric Power, Ho Chi Minh City College of Electric Power, Central Electricity College is a member of the group. • Telecommunications: Electricity Telecommunications Company and mobile networks, Internet services. • Finance and banking: EVN is a shareholder of An Binh Commercial Bank. • Vietnam Energy Institute is a research institute in the field of power attached to EVN. Up to now, Electric industry still has high monopoly. Vietnam Electric Group (EVN) is single buyer and single seller in the market. EVN’s functions are deciding and orienting strategies to develop the electric industry, the electric project, balancing the supply and the demand. With an important role in the electric industry, EVN can decide almost all problems, such as where the electric is bought, how much the price is, etc. II. THE SUPPLY OF THE ELECTRIC INDUSTRY

According to EVN, in the March 2012, the national power system operation, the electric supply is safe and stable. The power output of system reached 10.03 billion kWh (in which hydropower accounted for 34.4%, 24.2% coal, gas-fired power 39.25%). Average power output is 323.5 million kWh per a day. The highest output is 342.48 million kWh per day (20th March) and the highest capacity is 16,513 MW. We have 2 main sources to produce electricity: hydroelectric power, thermoelectric power. However, we depend on the hydroelectric power more, that is why we often lack of the electricity every dry season. In development plant, the density of the hydroelectric power will decrease gradually and the density of thermoelectric power will increase. The noticeable feature in the graph below, this is appearance and contribution of new power sources: nuclear power and renewable power. Besides the domestic power, EVN still have to import from China was 4.65 billion kWh

National grid is operating with a voltage of high T-500kV, 220kV and 110kV and medium voltage 35 kV and 6 kV. All 500KV and 220KV transmission lines are managed by the National Power Transmission Corporation, the distribution grid at a voltage of 110 kV and high-voltage power grid at a voltage of 6 kV to 35 kV are managed by the domain power companies. Table 1. Amount of transmission lines and stations to be added into the national grid for the period 2010-2030 Items| Unit| 2009| 2011-2015| 2016-2020| 2021-2025| 2026-2030| 500kV Station| MVA| 7,500| 17,100| 24,400| 24,400| 20,400| 220Kv Station| MVA| 19,094| 35,863| 39,063| 42,775| 53,250| 500kV Line| Km| 3,438| 3,833| 4,539| 2,234| 2,724|

220kV Line| Km| 8,497| 10,637| 5,305| 5,552| 5,020|
In order to satisfy the power demand, the Government of Viet Nam has set specific targets for production and import of electricity. In the Master Plan VII for the period 2010-2020 Vision 2030 goals include: * Manufacturing and importing a total of 194-210 billion kWh by 2015, 330-362 billion kWh by 2020 and 695-834 billion kWh in 2030. * Prioritize the production of electricity from renewable energy sources by increasing the proportion of electricity produced from these energy sources from 3.5% in 2010 to 4.5% of total electricity production in 2020 and 6% in 2030.

* Reduce the coefficient of elasticity of electricity / GDP from the current average of 2.0 to 1.5 in 2015 and 1.0 in 2020. * Promote a plan to electrify the countryside and the mountainous region to ensure that most of the families in these areas have electricity in 2020. The electric industry is a monopolistic market, so EVN must always develop the strategies in business and production. And they have 4 main strategies: * Diversification of domestic power production including traditional power sources (such as coal and gas) and new sources (such as renewable energy and nuclear power). * Keep balance in developing capacity on each source region: North, Central, and South, to ensure the reliable supply on each domain power system in order to reduce transmission losses, power sharing and exploit the hydroelectric power plants productively in each season. * Development of new power sources goes together with technological innovation of operating factories. * Diversify forms of investment and development to enhance competition and increase economic efficiency.

III. tHE DEMAND OF THE ELECTRIC INDUSTRY

Nowadays, the structure of electricity consumption is concentrated in two fields: the industry and the household consumption, about 90% of demand of power. The main demand is from the processing industry and the manufacturing industry, which promotes the Vietnam’s development. In the future, according to the National Power Development Master Plan VII, the electricity demand of the country will be continued to grow by 14 – 16% per year in the period 2011-2015 and then slow down to 11.15% per year in the period 2016-2020 and 7.4 – 8.4% per year in 2021-2030. The demand of electric industry is affected by many factors, such as GPD, population, electric price, etc. However, the more clear influence is the price. At present, the retail price is made by Ministry of Industry & Trade, when they want to change the price, they must give a plan and submit to the Prime Minister for allowance. Based on the retail price of electricity, EVN will balance and decide on the purchase price as well as the structure of power.

According to the Government, electric price would be adjusted annually under Decision 21 but with careful consideration of timing to ensure minimal impacts on social-economic issues in general and on people’s production in particular. Followed the Decision 21, in March 2011 the average electricity price has rose to 1,242 VND per kWh (around 6.5 US cents), which is 15.28 percent higher than the price in 2010. In 1st July, 2012, the average price of electricity is 1.369 VND/kWh (not include VAT), increases 65 VND/ kWh (5%) in comparison with the old price. So from 2009 up to now, the electric price increases fivefold. This affects both the household and the firm. However, authorities consider that the manufactory has to deal with more problems than the household. The increase in electric price makes the firm rise the cost, increase price of goods, while the business is difficult to increase the selling price. This makes a lot of firms have more difficulties. The increase in electric price certainly makes CPI higher, people have to buy some goods with higher price. IV. THE RISKS OF ELECTRIC INDUSTRY

There are 6 major risks for EVN.
1. The monopoly in electricity of EVN.
2. The weather.
3. Input factors of thermoelectric power.
4. Construction time and Technology.
5. The interest.
6. The exchange rate.
But in this presentation, we want to emphasize “The monopoly in electricity of EVN”. EVN is corporation which belongs to Vietnamese Government, it was founded in 1995. Until 2010, the electricity market in Vietnam is still a State monopoly market where Electricity Corporation of Vietnam (EVN), a state company, owned more than 71% of all electricity generation capacity, all transmission lines, all electricity operation systems, electricity distribution and electricity retail.

Functions of EVN are producing, transmitting and distributing electricity. With these functions, EVN has monopoly position in the industry, so EVN has to face with a lot of problems about developing the electric supply: * Negotiating, signing contracts to buy and sell new power, which EVN has a lot of difficulties, inexplicitness, wastes a lot of time, etc. * The selling price of the electricity depends on EVN’s decisions, so EVN’s risk is they have to accept a lower price in comparison with their expected price if they want to sell more and more outputs or EVN cannot compensate the investment cost and the interest. * The monopoly of EVN blocks significantly attraction of private investment and other country in the world make a lot of problem for development of EVN * EVN’s exclusive right in electric market makes it impossible for other investors to invest in this industry (private and foreign investment), so restrict the development of it.

V. THE PROSPECTS OF ELECTRIC INDUSTRY
To mobilize investments for electricity development, the government applies the methods which are based on the electricity price and pursue environmental protection. The investment portfolio is different for different power sources. However, the Government of Vietnam has set a target to develop a competitive electricity market in order to improve the economic efficiency about the power supplies and the domestic demand. According to the Draft plan, to develop a competitive electricity market, the electric industry’s development will have three stages: 1) Competitive generating power market (2005 -2014): power plants could offer to sell electricity to single buyer; 2) Competitive wholesale market (2015-2022): wholesale companies could compete to buy electricity before selling to distributors; 3) Competitive retail market from 2022: consumers can choose their own power suppliers. Apart from developing a competitive electric market, the increase in the demand of the electric market increases day by day is a prospect. In fact, the quantity of demand is greater than the quantity of supply and in the forecast, the quantity of demand will be continued to rise in long-run with high speed. Therefore, the government focuses on the investment too much to improve the supply.