Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM) said building a competitive power market had been a consistent policy in Viet Nam. — VNA/VNS Photo Ngoc Ha

HA NOI (Biz Hub) — The electricity tariffs in Viet Nam could be lower if the country develops renewable energies and promotes liberalisation alongside.

The prices had been too high due to the strong monopoly in the market, Prof Dr. Andreas Polk from the Department of Business and Economics, Berlin School of Economics and Law, said.

Polk told the seminar called to share experiences on reform of the competitive power market in Germany and lessons to Viet Nam, held in Ha Noi yesterday, that electricity tariffs in the country were sharply reduced between 40 per cent and 50 per cent from 2007 to 2013 as it operated in the competitive power market, facilitating participation of several businesses.

He said that the power market in Germany required transparency in tariff structures after liberalisation. Experiences from the country showed that customers would benefit in a competitive power market. This has also encouraged enterprises to improve their quality and reduce prices.

He emphasised that Viet Nam could build a competitive market, meaning lowering the power tariff to the lowest level or even zero dong if the country paid attention to developing power resources from renewable energies such as the wind and the sun.

The monopoly in Viet Nam was quite strong, which had not created opportunities for several businesses to join in the market, he said. This resulted in high prices. Viet Nam also lacked policies for development of renewable energies, he added.

Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM) said building a competitive power market had been a consistent policy in Viet Nam.

The operation of the country's electricity sector had been similar to other countries in the world. It included segments of power generation, transmission, and distribution, in addition to wholesale and retail.

"Viet Nam should pay attention to the electricity management policies together with market management," Cung said, and added that the issues of cost structure and inputs should be clarified to improve the market's competitiveness.

He said the power market had been developed step by step to suit economic development due to its special characteristics.

Le Hong Hai, from the Ministry of Industry and Trade's Electricity Regulatory Authority of Viet Nam (ERAV), said after three years of operations, the competitive power market in Viet Nam had seen initial success. The market's operations had increased transparency and fairness in mobilising power resources.

In addition, the electricity system had been safely operated, supplying sufficient power for the country's socio-economic development.

Hai said the power sector should urge power plants to directly join the market, especially, the management system of competitive wholesale power market, which should see investments to meet with its requirements. The system would need three to four years for completion.

Specialist Cao Dat Khoa from the Electricity of Viet Nam (EVN) said the country should consider legalising the power sector's restructuring and gradually follow basic market rules of supply-demand relationship and prices.

In addition, consumers should enhance power saving and accept market mechanisms in the sector, Khoa said.

EVN accounts for 60 per cent of the total power capacity and holds the key role in electricity purchases. The group has provided power to around 23.5 million customers in Viet Nam. — VNS