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January 27, 2008

Blackouts to darken economy

Serious power shortages are forecast this year leading to blackouts which will bite into the economy. Dinh Quang Tri, Electricity of Vietnam’s (EVN) deputy general director, said power shortages would be felt more acutely than previous years as the economy was expected to grow by around 9 per cent in 2008.

Statistics released by EVN stated that the electric shortage would amount to around 1.5 billion KWh. The two previous years combined accounted for a one billion KWh deficit.

However, experts warned that a power deficit of close to two billion KWh could be on the cards due to a lack of water in the country’s reservoirs.

A recently submitted EVN report indicated that power generation would stall during the dry season which runs from January to May.

EVN estimated power usage in 2008 to increase by 15.9 per cent against 2007. Last year, commercial electric output reached 58.57 billion KWh, an increase of 7.4 billion KWh against that of 2006.

The report said water reservoirs such as Hoa Binh, Ialy, Tri An, Ham Thuan, Thac Mo “have not reached normal levels to ensure power generation at a necessary volume to serve the economy. Additionally, the biggest thermoelectric source supplied by the extended Uong Bi power plant is estimated to be unsustainable due to the instability of coal and input materials for power generation,” it stated.

Tri said that if Vietnam’s gross domestic product growth rate came in at 9 per cent, the power growth rate would have to double to result for the economy’s sustainable development.

The Ministry of Industry and Trade (MoIT) estimates that over 20 electric plant projects need to be brought online from now until 2010 to satisfy growing demand.

Thai Phung Ne, envoy for the prime minister in charge of electric source projects, said that the slow pace of putting plants into operation had caused the situation. World Bank analyst Nguyen Van Hung said that Vietnam was growing quickly but the growth of energy was not on par with economic development.

He said that the rising price of crude oil along with a lack of funding for power projects were primary problems facing the industry today. EVN said that in 2007, around VND30,000 billion ($1.9 billion) was needed for additional plants. But in the years to come, around VND60,000 ($3.7 billion) to VND80,000 ($5 billion) would be required each year.

Courtesy VNA

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