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Avoiding Energy Insecurity by Promoting Private Investment—The Case of the Vietnamese Power Sector

Publication | November 2019
Avoiding Energy Insecurity by Promoting Private Investment—The Case of the Vietnamese Power Sector

Viet Nam needs huge investment in the energy sector in the coming 30 years to satisfy the rapid increase in energy demand.

Given the current status of the electricity sector, which is primarily dependent on fossil fuels (coal) and increasingly reliant on imports, as well as the weak level of diversification in the energy supply, the threat of energy insecurity is emerging. As Viet Nam is becoming a middle-income country, it is necessary to look for alternative finance for energy projects that were previously dependent on the government’s preferential borrowing and on-lending. Serving the energy transition process, the involvement of the private sector is essential to ensure the smooth and effective sector reform that the country expects from relying mostly on private investment. We analyze the fundamental issues in accelerating private participation in the power sector: (1) the regulatory system is uncertain and unstable; (2) there is a concern in terms of reforming the power SOE sector toward a competitive, transparent, and equal treatment environment for market players in the field; (3) the infrastructure development does not keep pace with the electricity generation; and (4) the local financial market is immature in catering to the needs of the foreign private sector in the field.

WORKING PAPER NO: 1038