Assessment Of Power Sector Reforms In Viet Nam

Viet Nam envisions a completely competitive power sector in the long term, including full wholesale and retail competition. To attain this goal, it unbundled its power sector's monopoly structure and instituted institutional, regulatory, and pricing reforms. Although considerable progress has been made, implementation has not been expeditious, with the government still retaining a strong vested ownership and management interest in the power sector. Further restructuring is needed to ensure complete independence of the system players and to attain pricing transparency. In this country report, the Asian Development Bank assesses Viet Nam's experience in reforming its power sector for insights that other Asian developing economies could find useful when pursuing their own power sector planning and policy and strategy formulation.

This report examines three economies in different parts of Asia---Georgia, Sri Lanka, and Viet Nam---that introduced power sector reforms in recent years to create a commercially viable and efficient power sector. Each took a different route in moving away from a monopoly state-owned utility toward the common goal of a competitive, market-based, and better-regulated power sector. This report documents the broad spectrum of their power sector reform efforts, experiences, and relative successes as well as shortfalls, then uses international standard indicators to assess their economic, social, and environmental outcomes. Other economies should be able to draw valuable lessons and insights from this report for their own power-sector planning and policy and strategy formulation.

The latest energy sector assessment, strategy, and road map for Viet Nam highlights energy sector performance, major development constraints, and government development plans and strategy. The report highlights previous support from the Asian Development Bank (ADB) and other development partners, and ADB's future support strategy in Viet Nam's energy sector. The assessment, strategy, and road map will add on to ADB's 2016–2020 country partnership strategy for Viet Nam. The report also provides energy sector background information for ADB investment and technical assistance operations.

This publication presents the integration of a Strategic Environmental Assessment (SEA) in the revised Power Development Plan VII of Viet Nam. It demonstrates how incorporating an SEA into the planning process will produce plans that are based on a more thorough understanding of their implications for the economy, society, and environment of the country. Viet Nam's revised Power Development Plan VII is a model of good practice in integrating an SEA in the preparation of a strategic plan for the power sector of other countries, particularly in the Greater Mekong Subregion.

During the 1990s, a new paradigm for power sector reform was put forward emphasizing the restructuring of utilities, the creation of regulators, the participation of the private sector, and the establishment of competitive power markets. Twenty-five years later, only a handful of developing countries have fully implemented these Washington Consensus policies. Across the developing world, reforms were adopted rather selectively, resulting in a hybrid model, in which elements of market orientation coexist with continued state dominance of the sector. This book aims to revisit and refresh thinking on power sector reform approaches for developing countries. The approach relies heavily on evidence from the past, drawing both on broad global trends and deep case material from 15 developing countries. It is also forward looking, considering the implications of new social and environmental policy goals, as well as the emerging technological disruptions. A nuanced picture emerges. Although regulation has been widely adopted, practice often falls well short of theory, and cost recovery remains an elusive goal. The private sector has financed a substantial expansion of generation capacity; yet, its contribution to power distribution has been much more limited, with efficiency levels that can sometimes be matched by well-governed public utilities. Restructuring and liberalization have been beneficial in a handful of larger middle-income nations but have proved too complex for most countries to implement. Based on these findings, the report points to three major policy implications. First, reform efforts need to be shaped by the political and economic context of the country. The 1990s reform model was most successful in countries that had reached certain minimum conditions of power sector development and offered a supportive political environment. Second, countries found alternative institutional pathways to achieving good power sector outcomes, making a case for greater pluralism. Among the top performers, some pursued the full set of market-oriented reforms, while others retained a more important role for the state. Third, reform efforts should be driven and tailored to desired policy outcomes and less preoccupied with following a predetermined process, particularly since the twenty-first-century century agenda has added decarbonization and universal access to power sector outcomes. The Washington Consensus reforms, while supportive of the twenty-first-century century agenda, will not be able to deliver on them alone and will require complementary policy measures

Sri Lanka's power sector reforms were undertaken as part of a larger overall economic recovery effort and much-needed reconstruction program following a 30-year civil war. The power sector's restructuring, primarily geared toward encouraging more competition and improved regulation, has brought about wider access to the grid, lower transmission and distribution losses, and a more efficient generation system; but it was met with limited success in unbundling the power system and in making electricity tariffs cost-based and more efficient. This country report by the Asian Development Bank assesses Sri Lanka's experience in reforming its power sector for lessons and insights that other economies could find useful when pursuing their own power sector planning and policy and strategy formulation.

This review uses the OECD Policy Framework for Investment to present an assessment of the investment climate in Viet Nam and to discuss the challenges and opportunities faced by the government of Viet Nam in its reform efforts.