FDI businesses call for stable power supplies in Vietnam

Foreign-invested companies in Vietnam have expressed concerns over power shortages and called on authorities to provide stable supplies for industrial parks to ensure production.

KoCham

At the Vietnam Business Forum (VBF) on Tuesday, Hong Sun, chairman of the Korean Chamber of Commerce (Kocham), noted that some northern provinces experienced power shortages in June-July 2023.

South Korean companies, especially those in high-tech industries such as semiconductors, wish to enter the Vietnamese market, but identify power shortage concerns as a significant factor delaying their investment decisions, Hong Sun explained.

"The Vietnamese government acknowledges that these power shortages pose a significant obstacle to attracting foreign investors and enhancing the manufacturing competitiveness of Vietnamese companies. Efforts are being made to formulate countermeasures, but the situation is challenging in the short term," Hong Sun noted.

KoCham requested effective measures to ensure stable power supplies within industrial zones so that FDI companies, including those from South Korea, can engage in manufacturing activities with confidence, he said.

JCCI

Similarly, the Japanese Chamber of Commerce & Industry (JCCI) in Vietnam said there was a serious power shortage in the northern region, especially in industrial parks, last summer. As a result, some member companies were considering reviewing their global production systems.

JCCI put forward suggestions for the Vietnamese government to consider for the smooth operation of the manufacturing sector, including stable power supplies to industrial parks; advanced notice of power outages and power saving requests with time to adjust; and incentives for companies that save power and generate electricity.

The JCCI also suggested the government speed up the early development of legal frameworks and implementation guidelines for the facilitation of power development projects. These include laws related to the use of sea areas for large-scale offshore power plant projects, relaxing eligibility conditions for Direct Power Purchase Agreements (DPPA) for renewable energy projects, and reviewing the existing pricing mechanism for biomass/waste power generation.

Gas-fired and LNG-fired thermal power is beyond the scope of the Just Energy Transition Partnership (JETP), however, under the concept of the Japan-led Asia Zero Commission Community (AZEC), which aims to provide cooperation tailored to Vietnam's circumstances. Japan would like to expand its assistance and contribute to the realization of gas and LNG thermal power in line with the Power Development Plan VIII (PDP8) of Vietnam, the JCCI added.

AmCham

The American Chamber of Commerce in Vietnam (AmCham Vietnam) noted power supply and demand dynamics are complex, and a collaborative approach between the public and private sectors is essential to develop affordable, reliable, and sustainable electricity.

AmCham Vietnam encouraged continued dialogue between the Ministry of Industry and Trade, state utility Vietnam Electricity (EVN), and private sector stakeholders to explore viable short-term and long-term solutions for Vietnam to meet its energy security needs, including advancing approval of large LNG projects that support its energy security and transition goals.

The chamber recommended the government to consider aligning power purchase agreements (PPA) with international standards to enable multilateral institutions and development finance institutions to lend to large projects for energy transition and the renewable energy sector.

EuroCham

The European Chamber of Commerce (EuroCham) in Vietnam recommended the authorities soon establish PPA regulations to facilitate energy delivery from renewable energy projects directly to end-users, instead of via EVN and the national grid, with a direct offtake between generators and end-users.

EuroCham also urged the government to revise the PPA between EVN and clean energy producers to meet international standards and harvest the full cost-reduction benefits of the planned auction processes in exchange for full take-or-pay and key provisions which address concerns of international lenders.

Addressing the event, Prime Minister Pham Minh Chinh said Vietnam is striving to prevent power shortages with various solutions, including the implementation of DPPA. The statement is part of the government’s commitment to ensuring energy for green transition, digitalization, and digital economy.

Besides, PM Chinh noted two other commitments of ensuring the legitimate rights and benefits of FDI businesses in Vietnam in line with trends of green growth and climate change adaptation. He reaffirmed the country's commitment to independence, sovereignty, sovereign rights, political stability, social safety, and consistent policies to facilitate investors’ activities.