Comments on the Draft Law on Electricity (amended): Removing bottlenecks for the development of power source projects

The workshop was chaired by Mr. Ta Dinh Thi - Deputy Chairman of the National Assembly's Committee on Science, Technology and Environment; Mr. Truong Thanh Hoai - Deputy Minister of Industry and Trade and Ms. Pham Thi Thanh Huyen - Editor-in-Chief of the People's Representative Newspaper; with the participation of experts, National Assembly Committees, and National Assembly deputies.

On behalf of the Vietnam Oil and Gas Group ( Petrovietnam ), attending the Workshop were Mr. Pham Tuan Anh, Member of the Board of Directors of the Group; Mr. Phan Tu Giang - Deputy General Director of the Group.

Overview of the Workshop

Ensuring consistency and comprehensiveness

Mr. Ta Dinh Thi said that the workshop aims to continue listening to and absorbing opinions of National Assembly deputies, agencies, organizations, experts, and scientists to serve the examination and revision of the Electricity Law project (amended) to be submitted to the National Assembly at the upcoming 8th session.

He emphasized that this is a difficult and complicated law; the content is specialized technical economics, deep expertise, but the scope of regulation is very broad, interdisciplinary, highly interconnected, and has a great impact on the economy, society, security, national defense, etc.

Therefore, many requirements are set for this Draft Law such as: Fully institutionalizing the Party's viewpoints, policies and guidelines; meeting the requirements of synchronization and comprehensiveness; overcoming the limitations and shortcomings of the current Law; not overlapping with other Laws; not legalizing violations; international in nature; having to immediately resolve urgent practical issues while ensuring predictability and solving problems arising in the coming time; meeting both the requirements of state management and the requirements of electricity market development;...

Mr. Ta Dinh Thi - Deputy Chairman of the National Assembly's Committee on Science, Technology and Environment

With those requirements and urgency, Mr. Ta Dinh Thi suggested that delegates focus on discussing the main issue, in a frank, open and constructive spirit, to help the drafting agency as well as the reviewing agency complete the draft Law with the highest quality.

Speaking at the workshop, Ms. Pham Thi Thanh Huyen mentioned the urgency of amending the Electricity Law to meet the country's electricity demand, which is forecasted to increase significantly in the 8th Power Plan, nearly doubling and 5 times the demand in 2023, respectively, in 2030 and 2050; while also meeting Vietnam's goals and commitments to the international community on sustainable development related to the environment. According to Ms. Huyen, the Electricity Law (amended) needs to create a synchronous, transparent legal framework, encourage investment, especially in the field of renewable energy, while ensuring the rights of consumers and meeting the goals of environmental protection and national energy security. In addition, the provisions in the draft Law need to be feasible, consistent with the reality of Vietnam, avoiding regulations that are too complicated or not sufficiently grounded for implementation, causing difficulties for businesses and management agencies.

Creating conditions to attract investment in power source projects

At the Workshop, many opinions were raised to develop a Law to remove obstacles in investment in power source projects, especially in the context that power projects, especially gas/LNG power and offshore wind power, account for a large structure and important role in the power system according to Power Plan VIII but face many difficulties, obstacles and fail to attract investment.

Mr. Phan Xuan Duong, independent energy consultant, gives his opinion.

Mr. Phan Xuan Duong, an independent energy consultant, said that for power source projects under the Power Plan VIII, from now until 2030, each year we need 12 billion USD and from 2030 to 2050, each year we need about 18 billion USD for investment in power source development. The leading state-owned enterprises in this field, only EVN, Petrovietnam, and TKV, cannot afford it, so we must attract investment, diversify capital sources, and investment forms.

Regarding offshore wind power, Mr. Duong said that we should boldly conduct pilot projects to have pioneering projects, gain experience and lessons to pave the way for other projects, and assign state-owned corporations with relevant experience such as Petrovietnam to conduct pilot projects, on that basis, there will be reality to develop and replicate.

Petrovietnam Deputy General Director Phan Tu Giang gives comments on the Draft Law

As an independent investor in power source projects, currently accounting for 8% of the country's total installed capacity, Mr. Phan Tu Giang, Deputy General Director of the Vietnam Oil and Gas Group (Petrovietnam) commented that in the context that cheap sources such as hydropower and coal-fired power no longer have room for development due to physical factors as well as environmental requirements, the development of power source projects such as gas/LNG power and offshore wind power plays an important role in ensuring sources. Therefore, there needs to be appropriate policy mechanisms to attract investment.

In particular, with LNG electricity, there needs to be a long-term offtake mechanism (Qc) to be able to have a plan to buy LNG under a long-term contract because the long-term purchase price is much better than the short-term purchase. According to current calculations, the long-term purchase price compared to the short-term purchase price can differ by up to 73% if the long-term purchase commitment is only 20%, compared to the long-term purchase commitment of 90%. In addition, long-term purchase also ensures the issue of stable supply when the market is difficult and volatile.

Along with that, the construction of central LNG port warehouses (LNG Hub) will also significantly reduce construction investment costs; issues related to planning, investment, and construction will be focused, saving costs and time.

Investor Petrovietnam also proposed to increase the maximum mobilization of domestic natural gas electricity, not only to ensure the efficiency of domestic gas electricity projects but also to contribute to the national budget revenue from upstream projects. “If domestic natural gas mobilized in 2024 reaches 90-100% of the expected gas exploitation volume, the state budget revenue from upstream gas will increase by 1.75-2.14 trillion VND/year. In case of additional Block B gas source from 2027, if the gas volume is fully mobilized according to the exploitation capacity, the state budget will collect about 24 trillion VND/year during the stabilization period. For each kWh of domestic gas electricity price, the state collects a total of about 45%/unit electricity price,” said Mr. Giang.

Regarding offshore wind power projects, Mr. Tran Ho Bac, Deputy General Director of Vietnam Oil and Gas Technical Services Corporation (PTSC) shared international experience in implementing offshore wind power projects. Based on international experience, especially in neighboring countries, Mr. Bac proposed policies on investment divergence, increased decentralization, decentralization, policies on sea area allocation, land allocation;... In particular, Mr. Bac proposed a policy of prioritizing offshore wind power production for export, both to solve the problem of high electricity prices and at the same time to achieve economic and environmental goals, job creation, maritime security, etc.

“The draft Law devotes a chapter to renewable energy but does not mention any development funds. Should this Law institutionalize development capital and establish a specialized renewable energy development fund from many sources?”, said Delegate Thach Phuoc Binh, Deputy Head of the National Assembly Delegation of Tra Vinh Province.

Delegate Pham Xuan Hoa, National Assembly Delegation of Dong Thap province expressed his opinion

Delegate Pham Xuan Hoa, National Assembly Delegation of Dong Thap province, said, "The mechanism for piloting offshore wind power is necessary. State-owned enterprises must conduct the pilot but must have a financial support mechanism and assistance from the state."

At the workshop, delegates also discussed many issues on electricity price mechanisms, electricity market mechanisms, electricity development policies in remote, border, island areas, areas with difficult infrastructure, developing electricity projects in parallel with environmental protection goals, etc.

Deputy Minister of Industry and Trade Truong Thanh Hoai received and explained the opinions of delegates and experts at the Workshop. He affirmed that the drafting agency will receive maximum feedback in the spirit of the highest learning spirit to complete the best draft.

Concluding the workshop, Mr. Ta Dinh Thi emphasized that this is a difficult and complicated law that requires time to study and continue to contribute ideas to complete it. He hopes that in the coming time, he will continue to receive comments from delegates and experts for the drafting agency, the Ministry of Industry and Trade, as well as the agency in charge of reviewing the project, the National Assembly's Committee for Science, Technology and Environment. He affirmed that all comments will be accepted or explained, so that when presented to the National Assembly, it will achieve consensus and the highest quality.

Mai Phuong - Le Truc

Source: https://www.pvn.vn/chuyen-muc/tap-doan/tin/69437e2e-a14b-44be-962a-82e0ceac958b