Imprints of rural electrification
In July 2018, Quang Nam Power Company completed a project to connect the national grid to Co Tu ethnic minority people in Ch'Om upland border commune (Tay Giang district, Quang Nam province), marking a significant milestone on the journey of establishment and development of Vietnam Electricity, when 100% of communes and more than 99% of rural households across the country had access to electricity. Meanwhile in 1995, the percentage of rural households having access to electricity was only 50.8%. This achievement, according to Mr. Ousmane Dione - Country Director of the World Bank in Vietnam, is a miracle.
Also in 2018, EVN’s member companies continued to successfully implement their rural electrification projects to electrify every corner countrywide such as Yen Bai, Son La, Quang Ninh, Gia Lai, Phu Yen and Lam Dong, Tra Vinh provinces, etc., helping thousands of households to have access to the national power grid; contributing to changing the face of countryside; improving cultural and spiritual life of people in remote, border, island areas, etc.
In 2018, EVN commenced projects such as Quang Trach Thermal Power Plant – Vung Ang 500 kV transmission line and 500 kV switchyard in Quang Trach Power Complex; Quang Trach - Doc Soi 500 kV transmission line and Doc Soi - Pleiku 2 500 kV transmission line. These are particularly important and urgent projects, which have great economic, social, political, cultural, national defense implications, strengthening the power supply from power plants in the North, Central and Central Highlands to the Southern provinces where currently face a shortage of electricity. In addition, these projects aim to interconnect the regional and national power grids at 500 kV voltage level to ensure the national energy security.
In 2018, EVN's construction investment works continued to be expedited, with many important power grid projects being completed to strengthen the power supply capacity for the national power system. EVN and its member organizations focused on adopting new technologies, upgrading and modernizing the power system; improving operation efficiency of power plants, bettering power supply reliability indicators; standardizing equipment on the power system, etc.
Project management activities from investment preparation, survey - investigation, design, selection of contractors, quality assurance and control to acceptance, payment and settlement gained a lot of improvements. During project implementation process, project management boards, functional departments of EVN and corporations closely monitored and followed up projects, coordinated well with consultants, suppliers, contractors, relevant ministries and authorities, with the aim of promptly addressing arisen problems, fixing technical problems, doing quantity and quality acceptance for projects, based on project implementation schedules, etc.
Leaders of the Government, EVN and delegates are performing a symbolic action to start the 500kV transmission line circuit 3 – a national significant project
Delighted signals of mobilization of financial resources
The year 2018 was marked by impressive achievements of EVN in mobilizing financial resources for investment - construction projects. The Group was assigned by the Fitch Ratings (one of the prestigious credit rating organizations in the world) as an Issuer Default Rating (IDR) of BB, with a "stable outlook" for long-term foreign currency, aligning with Vietnam’s sovereign rating.
According to Mr. Dinh Quang Tri – Vice President of EVN, this was a very objective rating which was of particular importance to EVN. Each year, EVN needs to mobilize USD 5 - 6 billion for investment in power projects. Previously, the financial arrangements were performed via mainly ODA channels from international financial institutions such as WB, JICA, ADB, AFD or borrowing from domestic and foreign commercial banks. In particular, most foreign loans required sovereign guarantee by the Government. However, the Government currently advocates reduction of public debts and limitation in providing sovereign guarantees for businesses. Meanwhile, only when obtaining an international credit rating, can businesses borrow directly without sovereign guarantee. Therefore, this positive rating provides a strong assurance for potential domestic and international investors on EVN’s credibility, and EVN is now on a stronger footing to mobilize financial resources for power projects. Along with that, EVN will be able to issue international bonds, diversifying its financing sources.
According to the economic expert, Dr. Can Van Luc, this credit rating not only helps EVN to operate more transparently and have a more intensive and extensive global integration, but also increases the possibilities of access to international financial sources. In particular, EVN will be likely to borrow from foreign countries at an interest rate equivalent to the one applicable to the country, etc.
With relentless efforts, in 2018, EVN's financial arrangement achieved positive results. The total value of construction investment is estimated at VND 111,894 billion, no projects had to stop due to lack of finance.
Many difficulties ahead
Despite promising signals being rated by Fitch Ratings at BB level, the mobilization of financial resources imposed a big challenge for EVN as the annual capital requirement is huge. As for projects in the program of electricity supply for rural, mountainous areas and islands during the period of 2013 - 2020 (Program 2081), the state budget and ODA financial sources account for 85% of the total capital requirement, EVN’s counterpart fund accounts for the remaining 15%. However, the state budget is still limited, not yet adequately allocated; meanwhile the investment fund of power corporations is very limited too.
It should be noted that the credit room for EVN is almost no longer available, because EVN and its member companies have exceeded the lending limit according to current regulations. Therefore, in the following years, in addition to the internally generated financial sources such as basic depreciation fund, development investment fund, earnings from equitization, etc., EVN has to mobilize external financial sources in various forms including ODA loans, development assistance loans, borrowing from commercial banks, from domestic and international bond issuance, etc.
Besides, land acquisition and site clearance related problems maintain to be a big challenge in power project implementation. In the provinces Dong Nai, Long An, Can Tho, etc., many transmission grid projects are behind schedule due to problems related to site clearance. These are urgent projects of particular significance in evacuating power from power plants to ensure electricity supply for the South.
Specifically, in Dong Nai province, there are three national significant projects under construction, including Vinh Tan - Song May - Tan Uyen 500 kV transmission line, Song May - Tan Uyen 500 kV transmission line, lines connecting to Tan Uyen 500 kV substation. Over the last time, the Southern Power Project Management Board (under the National Power Transmission Corporation) cooperated with the People's Committees of districts, related local departments and agencies of Dong Nai province to settle most of the land acquisition and site clearance related problems. However, some households have not agreed to receive compensation, or some already received compensation but have not moved out and handed over land, etc. Unfortunately, as for grid projects, if one location is not cleared, the whole project implementation schedule will be delayed.
Although leaders of EVN and the National Power Transmission Corporation have worked with Dong Nai People's Committee and local authorities for several times; the Prime Minister has issued many instructions; so far, these troubles have not been resolved yet. If the implementation progress of these projects is not secured, the threat of power shortage in the South in the coming time will surely occur.
Despite challenges ahead, EVN and its member organizations will attempt to overcome and keep a high rate of investment – construction to enhance the capacity of the power system. However, EVN needs the collaboration of local people and authorities in assisting EVN to solve existing difficulties and obstacles so that in 2019, the projects will be implemented on schedule, contributing to securing sufficient electricity supply for the national socio - economic development, national defense - security and people's life, etc.