US embassy cable - 05HANOI773

UNCLAS HANOI 000773 
 
SIPDIS 
 
STATE FOR EAP/BCLTV and EB 
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO 
 
E.O. 12958: N/A 
TAGS: ENRG, ECON, EIND, EINV, VM 
SUBJECT: VIETNAM: ELECTRICITY SHORTAGES POSSIBLE 
 
 
1. (SBU) SUMMARY: Vietnam's power industry is struggling to 
meet electricity demand due to a prolonged drought and 
delays in the construction of new power plants.  Despite 
increased electricity imports from China, Vietnam faces a 
serious energy crunch in the coming two years, according to 
an official at Electricity of Vietnam.  With no new large- 
scale power plants starting operations until 2007, 
electricity shortages are a real possibility in the near 
future.  End Summary. 
 
Electricity of Vietnam 
---------------------- 
 
2. (U) Electricity of Vietnam (EVN) dominates Vietnam's 
power sector.  EVN is a state-owned enterprise with 17 power 
plants, four transmission companies and seven power 
distribution companies.  EVN's total installed capacity at 
the end of 2004 was 11,500 Megawatts (MW).  Total nationwide 
electrical power generation reached 47 billion Kilowatt 
Hours (KWH) in 2004, of which EVN generated 40 billion KWH. 
EVN buys the remaining power, approximately 7 billion KWH, 
from independent power producers (IPPs) to satisfy the 
country's needs for electricity. 
 
3. (U) Historically, EVN has been able to satisfy the power 
demands of Vietnam's development and has managed to 
electrify about 87 percent of rural households.  Driven by 
economic expansion and industrialization, Vietnam's power 
generation and consumption have increased an average of 15 
percent annually in the last ten years.  In some provinces, 
particularly those with industrial zones, the demand for 
electricity has increased over 20 percent annually. 
 
Shortage of Power in 2005 and Beyond 
------------------------------------ 
 
4. (U) A prolonged drought has severely curtailed normal 
hydroelectric power generation in Vietnam in recent months. 
Deputy Director of EVN's Office of International Cooperation 
Ms. Phan Thu Thuy Tien confirmed to Econoff that three 
principal reservoirs throughout the country (Hoa Binh, Thac 
Ba, and Tri An) all have dangerously low water levels and 
that the water volume in these reservoirs is down 20 to 40 
percent compared to previous years.  Hydropower plants have 
previously provided up to 40 percent of the country's total 
output, but power from these hydropower plants has accounted 
for just 24 percent of total output this year. 
Precipitating the water level decline is the government's 
mandate to release water for downstream farming use, a high 
government priority.  EVN has estimated that Vietnam will 
have a 200-300 MW shortage this year alone.  Tien confirmed 
that if the current drought continues, blackouts throughout 
Vietnam are possible in the near future.  She added that a 
contributing factor is the delay in finishing the Danang-Ha 
Tinh 500 KV transmission line and both the Ca Mau Power (720 
MW) and O Mon thermal (2400 MW) power plants.  When asked 
about the severity of the country's energy problems, Tien 
admitted very frankly that it was "serious" and likely to 
continue through 2007. 
 
5. (U) EVN has been turning to IPPs and other sources such 
as coal, oil and gas to cope with the current electricity 
demand, but what Vietnam needs most urgently is additional 
power plants, Tien noted.  While China is supplying 
electricity to Vietnam, EVN estimates that China will 
eventually provide only 200 MW of power for Northern 
Vietnam.  At present, 40 MW of power is being transmitted to 
Northern Lao Cai Province using a 110 Kilovolt (KV) 
transmission line.  Another contract to buy 40-60 MW for Ha 
Giang province has been signed, but is not in operation 
pending the completion of a 110 KV transmission line, Tien 
remarked. 
 
MARINE