Vietnam’s state power provider Electricity Vietnam or EVN has reached an agreement with the Vietnam Development Bank for US$2 billion to build more power generation and transmission lines. The agreement was arranged on the back of borrowing limits with commercial banks being reached and challenges accessing foreign capital for EVN, The Investor is reporting.
Of note, last year, power shortages were estimated to have cost Vietnam’s economy an estimated US$1.4 billion. This was attributed to water shortages for hydropower and a lack of a sufficient supply of coal, however, underinvestment in power infrastructure also played a role.
This is in large part because EVN hasn’t had the money to invest which is connected to rising input prices but regulated retail electricity prices that have seen the state power provide selling electricity at a loss. With this in mind, this latest announcement may be significant, however, broader underlying challenges with the structure of Vietnam’s electricity market remain.