Top Stories
Top Stories
Wires

Vietnam will face severe power shortages from 2021 -ministry

Khanh Vu

HANOI, July 31 (Reuters) - Vietnam will contend with severe power shortages from 2021 as electricity demand outpaces the construction of new power plants in the Southeast Asian country, Vietnam's Ministry of Industry and Trade told Reuters on Wednesday.

The lack of energy infrastructure could put the brakes on foreign investment inflows into one of Asia's fastest growing economies, and challenge Vietnam's position as the top beneficiary of the U.S.-China trade war.

Vietnam's demand for electricity will exceed its supply by 6.6 billion kilowatt-hours (kWh) in 2021, a figure set to increase to 15 billion kWh by 2023, equivalent to around 5% of the country's forecasted demand for electricity then, the ministry said in an emailed statement.

In addition to the shortfall, many energy projects in Vietnam have been facing long delays, the ministry told Reuters.

"Developers are facing difficulties securing sufficient funds from local sources and the government has limited its guarantee for foreign loans," the ministry statement said.

Vietnam will need an average of $6.7 billion a year to expand its annual power generation capacity by 10% between 2016 and 2030, it added.

"This is a big challenge, given that the current electricity prices in Vietnam are barely enough for the developers to make a profit," the statement said.

Last month, state media said 47 of Vietnam's 62 electric generation projects of 200 megawatts (MW) or more had been facing delays, with some at least two years behind schedule.

With a population of 96 million and annual gross domestic product growth of about 7% backed by robust foreign investment and exports, Vietnam's power generation will need to rise from about 48,600 MW currently to 60,000 MW by 2020 and 129,500 MW by 2030, according to government data.

In 2018, the World Bank said Vietnam needs to invest up to $150 billion by 2030, almost twice the $80 billion already spent on its power sector since 2010.

Vietnam is increasingly reliant on coal, which makes up 38.1% of the country's generating capacity, the ministry said. Vietnam will have to use 720 million tonnes of domestic coal in addition to 680 million tonnes of imported coal to feed its power plants during the 2016-2030 period, the ministry said.

The country will also have to import liquefied natural gas (LNG) for its power plants, the ministry added, and the power shortage is expected to gradually subside after 2025 when several new gas-fired power plants go online. (Reporting by Khanh Vu; Editing by James Pearson and Christian Schmollinger)