The restructuring will be carried out in stages and linked to the development of a competitive electricity market, Bui Quoc Hung, deputy head of the Electricity and Renewable Energy Authority, said at a press briefing held by the Ministry of Industry and Trade (MoIT) on Wednesday.

The government has tasked the ministry with preparing two plans related to restructuring the power sector: a restructuring plan to support the development of a competitive electricity market and a restructuring plan for EVN.

The EVN restructuring plan has been assigned to the Ministry of Finance in coordination with the industry ministry, and was submitted to the government on September 15.

Vietnam's power sector includes many domestic and foreign companies, including foreign-invested firms. EVN currently owns only about 40% of the country's power generation capacity.

The restructuring plan aims to separate different stages of the electricity business and clearly distinguish activities that are natural monopolies from those that can be opened to competition.

"Transmission and power system dispatch have their own specific characteristics, while power generation, wholesale and retail are areas where competitive markets can be developed at different stages," Hung said.

Under the government's instructions, the industry ministry is reviewing the current structure of the power sector and developing a restructuring framework in line with the roadmap for a competitive electricity market, covering EVN and its subsidiaries.

State considers divestment from power generation companies

For power generation, the restructuring plan calls for the state to divest its stakes in EVN's generation companies. The government is also considering establishing a strategic national power generation corporation to manage strategic power sources and projects, such as multi-purpose hydropower plants and nuclear power projects.

The new entity could initially be part of EVN but would be considered for separation from the group in the longer term, according to Hung.

Power transmission to be separated from EVN

For transmission, the Vietnam National Power Transmission Corporation (EVNNPT) is expected to be separated from EVN under the restructuring plan to meet the requirements of a competitive electricity market.

For distribution and retail, the distribution and retail functions of EVN's five power corporations will initially be gradually separated.

In the longer term, the separation could extend to both organizational and ownership structures, in line with the development of a competitive retail electricity market, Hung said.

The separation of the different stages of the electricity business will need to be carried out gradually and in tandem with the development of successive levels of a competitive electricity market, he added.

Power supply projects face delays

On electricity supply, Hung said implementation of some power generation and grid projects remained behind schedule, creating difficulties for the implementation of Vietnam's Power Development Plan VIII.

Obstacles include the approval of investment policies and land allocation, while power generation projects require very large amounts of capital.

To address these issues, the industry ministry is urgently preparing amendments to the Electricity Law, which are expected to be submitted to the National Assembly at its second session.

The amendments are aimed at removing obstacles to project implementation and accelerating the rollout of the Power Development Plan VIII (PDP VIII).

The ministry has also made recommendations to the government to resolve difficulties facing projects included in the plan's implementation program and ensure adequate power supplies.