Fast Market Research recommends "Vietnam Power Report Q2 2014" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 03/28/2014 -- Our relatively bullish long-term outlook for Vietnam's power sector, predicated on our view that the country will see strong and prolonged economic growth, remains fully in place. Nonetheless, we reiterate that low tariffs, rising dependence on imported fuel (namely coal) and lack of regulatory clarity remain key downside risks.
Hikes in power generating capacity and significant improvements in the transmission and distribution (T&D) segment are a recognised necessity, with Vietnam's Master Plan VII predicting that the country will need 75,000MW of installed capacity by 2020. In addition, the launch of Vietnam's competitive generation market (CGM) on July 1 2012 is certainly a step in the right direction, with an increasing number of international actors having showed interests in the market (as illustrated by the projects in the pipeline for development after 2015).
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Additionally, we believe that the development of the Vinh Tan 1 plant underscores the growing attractiveness of Vietnam's thermal generation sector. We have already witnessed a flurry of activity in private-sector activity over the past year, which we attribute to the introduction of the competitive generation market and the successive increases in the electricity tariff.
That said, a number of pertinent risks remain prominent, leading us to believe that a discrepancy will certainly emerge between planned and realised capacity. Most notably:
- We believe that any delays in the construction of the Ninh Thuan 1 nuclear plant will have serious ramifications on the Vietnamese power sector over the long-term. The supply of electricity is likely to act as a serious impediment to growth in actual electricity consumption should construction of the Ninh Thuan 1 nuclear plant by delayed.
- Regulatory uncertainty and delays remain significant. For instance, the cancellations of nine small- to medium-capacity hydropower plants in October 2012 highlighted an increasing lack of opportunities for small-scale hydropower generation, due to growing environmental concerns. However, we believe that the cancellations also displayed a disparity between provincial and federal level planning.
- Low tariffs and dependence on imported fuel (namely coal) as a key impediment to the power sector's growth potential, and news that theft of electricity is on the rise is worrying.
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