PPP – the “lifebuoy” for recycled energy projects

Firstly, investors have not been convinced about the benefits they can enjoy if developing PPP projects.The Prime Minister’s Decision No. 71 released in 2010 officially kicked off the operation of the PPP model. However, PPP in Vietnam has been facing too many difficulties.

Analysts say while non-state investors have to inject big money in technologies and labor force, they are not sure about the profits and the time needed to take back the investment capital. This has been attributed to unattractive encouragement policies set up by the government, and to the lack of transparency in some matters.

The government has submitted to the National Assembly the draft of the amended power law, while "ignoring” the issues relating to the recycled energy sector.

At present, due to some reasons, the prices of the electricity generated by recycled energy projects remain sky high, thus making it less competitive in comparison with the electricity made of fossil materials, and with the Chinese super cheap electricity imports.

Investors are ready to pour capital into recycled energy projects. However, they would only make disbursement when they can see the benefits the projects can bring.

Secondly, private investors themselves still cannot successfully persuade the State to feel secure to entrust them. The projects in the recycled energy sector mostly are the ambitious mammoth projects with which investors hope to take back the investment capital quickly.

The US First Solar Group has arrived in Vietnam with the 1.2 billion dollar project in Cu Chi district in HCM City. With the project, First Solar would be able to provide more than 250 MW of solar electricity to HCM City, the southern region and the north as well.

However, there has been no report about the operation of any small pilot projects so far. The investor has just shown the potential figures based on the existing research works and estimates. Meanwhile, no similar project was implemented in Vietnam before. This has raised worries to the government of Vietnam about a lot of possible problems, including the environment problem.

As such, the US investor still cannot convince the state about the benefits to be brought by the power project to the nation. Therefore, it is understandable why the investor feels that the State still has not paid appropriate attention to recycled energy projects.

Analysts have commented that instead of persuading the partners about the benefits they can enjoy, both the state and private investors have been simply running after their interests. Meanwhile, the risks of the projects still have not been clarified for the involved parties to weigh and decide whether to implement the projects.

The analysts believe that the PPP model applied in Indonesia and Germany should be the lesson for Vietnam to consider. While private investors show the government the visible benefits of recycled energy projects brought by the pilot projects in reality, the government of Indonesia made active responses by setting up reasonable encouragement policies, including the policies on site clearance and low interest rate loans.

In Germany, people, who use solar energy for 20 years would be able to enjoy preferential prices. This means that solar energy plants would feel secure about the outlets when they can sell power at the prices higher by 50 cent per kwh than the normal prices.