08:59 (GMT +7) - Tuesday 16/07/2019

BUSINESS SPOTLIGHT

EVN: Provision of electricity to islands problematic

Released at: 16:22, 03/05/2019 BUSINESS SPOTLIGHT

EVN: Provision of electricity to islands problematic

Photo: EVN

State-owned electricity company striving to supply power to remote island districts despite host of challenges.

by Hung Cao

In order to deploy its “lighting up islands” project, Electricity of Vietnam (EVN) must actively mobilize huge capital sources, and between 2013 and 2018 invested more than $262 million to link the national power grid with island districts. While such projects involve high levels of investment, they do not bring financial efficiency, and this has challenged EVN in persuading other investors.

In addition to financial sources from the State budget, EVN has also actively worked with international organizations and banks such as the World Bank (WB), the Asian Development Bank (ADB), and the German Reconstruction Bank (KfW), among others, to mobilize ODA and preferential loans and at the same time sought to attract social resources for its island projects.

Difficulties in construction and operation

After overcoming difficulties in mobilizing capital for project proposals, EVN and contractors and constructors have then faced the harshness of the ocean climate and erratic tides and other complicated construction conditions, which depend entirely on the geological characteristics of each sea area.

In the project connecting the national power grid to Co To Island in northern Quang Ninh province, laying 110 kV electric cables by balloon was considered the most feasible option, but contractors still struggled with the changing climate and tides or strong winds.

Its project linking the national power grid to Lai Son Island in the Mekong Delta’s Kien Giang province saw up to 40 per cent of construction being carried out during winds of level 5 or higher.

Due to its geographical location far from the mainland, power supply to Truong Sa and also DK1 Rig in the East Sea was even more challenging. After completing construction, new problems in operating the electricity network arose. Networks often suffer from harsh thunderstorms and storms, and due to the influence of the ocean climate, the island’s electrical equipment was easily damaged by the high salt concentration in the air, creating a range of risks in reliable operations.

Losses of $64.5 million

When conducting projects bringing power to islands, EVN is also under pressure in balancing economic efficiency. In managing direct electricity sales in island districts and communes, EVN has lost some $64.5 million due to the use of on-site, expensive diesel power.

According to Mr. Tran Tue Quang, Deputy Director of the Electricity Regulatory Department at the Ministry of Industry and Trade, the electricity price in districts and communes ranges from only 8.9 per cent to a maximum of 34 per cent of the production cost. In areas where EVN suffers huge losses, the selling price is only 2.32 per cent of the production cost.

Despite the difficulties, EVN Chairman Mr. Duong Quang Thanh affirmed that electricity supply to island districts along the country’s coastline has always been an important political task EVN focuses on. It concentrates all resources to ensure stable, continuous and reliable electricity supply to island districts with the aim of not only contributing to local economic development and improving people’s lives but above all contributing to ensuring national security and firmly defending the country’s sovereignty.

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