Bid to raise price of hydropower

Small hydro-electric plants propose their generated power be bought at a higher price as one of the measures to save them from losses and to tackle a capital shortage which has long been a headache.

The Viet Nam Chamber of Commerce and Industry held a forum to discuss the difficulties of small hydroelectric plants and suggested proposals to be made to the Government for better development.

Vice president of Lao Cai Enterprises Association Vu Ngoc Cu pointed out that electricity of small hydroelectric plants was currently sold to the Electricity of Viet Nam (EVN) at VND800-900 (US$0.038) per kWh.

Meanwhile, EVN bought it from China at about VND1,300 ($0.061) per kWh. "The difference in the prices is really unreasonable," Cu said.

Agreeing with Cu, Ha Sy Dinh, deputy director of Son Vu Energy Development, said that due to the low electricity price, the turnover of small plants hardly made up for the input costs, resulting in shortage of capital accumulation for reproduction or new investments.

Difficult access to loans with high interest rates (despite being decreased from more than 20 per cent to 15 per cent recently), were other matters of concern, Dinh added, saying that his company could not find any loans for hydroelectric plants in the past three years.

"Power prices paid to small hydroelectric plants should be increased at least to ensure their survival," stressed president of the Viet Nam Energy Association Tran Viet Ngai.

General secretary of the Viet Nam Electrical Engineering Association Dam Xuan Hiep agreed, stressing that "increasing the electricity price is the only solution to the capital shortage hitting not only small hydroelectric plants but also the whole power sector."

Investors of small hydroelectric plants also called for preferential loans to help them overcome financial difficulties.

According to Ngai, small and medium-sized hydroelectric plants should be allowed to participate in the competitive power generation market, which was launched at the beginning of this July.

Currently, only electric plants with a capacity of more than 30 megawatt can join the competitive power generation market.

Plants generating more than 10 megawatts should be eligible to join, he said.

"Or else, it would be very difficult for small and medium-sized hydroelectric plants to find buyers or they would be forced to sell electricity at a low price."

However, not all small hydroelectric plants’ investors agreed. President of Lao Cai Enterprises Association Hoang Minh Tuan said private investors currently did not want to join in the competitive power generation market as the procedures might be complicated, saying that they preferred to be offered a fixed price by EVN.

At the forum, small hydroelectric plants also expressed their concerns over the high water resource use tax.

Under the Decision 284 of the Ministry of Finance which came in force in February, the water resource use tax this year would be based on the electricity price of VND1,304 per kWh. However, the fact was that no plants could sell electricity to EVN at that high price.

Ngai said that enterprises which sell electricity at less than VND1,000 per kWh should be exempted from water resource use tax.

Nguyen Duc Dat from Viet Nam Energy Association said that in the past, small hydroelectric plants did not do well in terms of environmental protection. He emphasised that investors of small hydroelectric plants must now pay more attention to protecting the environment. There should be restrictions on the areas of forest cut down to build a hydroelectric plant.

In 2011, small hydroelectric plants generated about 3 per cent of the country’s total electricity output. There are more than 200 small and medium hydroelectricity plants throughout the country.