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Many changing policies make it difficult for investors

11:17 | 18/07/2020

VCN- As a leading renewable energy investor in Vietnam, Nguyen Tam Tien (pictured), the General Director of Trung Nam Construction Investment Joint Stock Company (Trung Nam Company) said that investors face many challenges, including those in the Government's policies. Enterprises want to extend the preferential price of electricity and flexibility in implementing the planning of the State management agency.

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many changing policies make it difficult for investors
Nguyen Tam Tien, General Director of Trung Nam Construction Investment Joint Stock Company

What are the difficulties and obstacles that investors face when developing renewable energy in Vietnam today?

- Renewable energy can now include solar power and wind power. The Government's policy in the current period is very open to renewable energy development but also has many challenges.

For example, for solar power, the Government provides a period of two years of preferential treatment (Decision No. 11/2017/QD-TTg of the Prime Minister on the incentive mechanism for the development of solar power projects in Vietnam effective from June 1, 2017 and expires June 30, 2019) is too short but also an experience to call for investment. Solar power works very fast; however, the Government's policies have many changes in the later period that made investors slow down.

Regarding wind power, we have seen that in the past 10 years, the country has only made 400MW, of which our company has mademore than 100MW. Investing in wind power is actually quite difficult. Firstly, all construction and installation equipment for wind power requires super-sized and super-heavyequipment, which requires special vehicles and special cranes to install. In Vietnam, the market is very limited for this, especially now it is beginning to develop nearshoreand offshore wind power. Equipment made at sea is not a problem. Simple, Vietnam has almost none. This is a huge challenge for investors.

Secondly, the whole equipment and technology of Vietnamese wind turbines is completely dependent on foreign countries. Recently, when the Government issued a policy to the end of 2021, it was the end of preferential prices for wind power (with the price of electricity in land 8.5 cents/kWh and sea wind power 9.8 cents/kWh) makes foreign suppliers arrest domestic investors that if they do not buy, there is no time to catch up, pushing domestic investors "to die".

However, due to the impact of the Covid-19 pandemic, the Ministry of Industry and Trade reviewed the proposals of investors, requesting the Government for wind power projects to enjoy the fixed electricity purchase price mechanism until the end of December 2023, then proceed to bidding andcompetitive auction to select the project developer. I feel the change is reasonable for investors to compensate for the time affected by the Covid-19 pandemic, and to return to negotiate fairly with foreign investors.

Particularly for Trung Nam, there iscurrently nearly 700MW of clean and renewable energy. From now to 2030, Trung Nam will develop about 10,000MW with solar and wind power. The company is preparing to do offshore. Recently, Trung Nam purchased cranes for onshore construction and some equipment made at sea ata total cost of nearly US$250 million.

From the perspective of investors in energy, whatdo you see in terms of investors who want high prices but the current retail price of electricity is unattractive as well as making it difficult for the EVN?

- It is not fair to say that the EVN will make it difficult, if so, do not invest in clean energy. Clean energy solves a common problem, seeing an angle of buying higher prices but Vietnam will be a good, clean environment.

The government has seen what they see in the world. To be fair, the wind power price in Vietnam is lower than other countries in the region. For example, the price in Japan is more than 20 cents/kWh. Combining all energy regions, the EVN has to balance it. If you choose cheap electricity, you will have to spend some money to treat the environment and on the contrary, choosing clean electricity is considered a high price but that price covers the environmental treatment problem, one direction must be chosen.

Do you have any recommendations or proposals on renewable energy development?

- In the immediate future, to propose the Government, the Ministry of Industry and Trade should extend the time to apply the preferential wind power price until 2023 for investors. In the past 10 years, the whole country has only 400MW of wind power, of which Trung Nam made upmore than 100MW, is it attractive to invest in wind power? Trung Nam makes more than 100 MW of this wind power in twoyears. Wind power is effective but not really attractive.

Wind power investment from the start of making additional planning to signing the contract and transporting equipment requires about twoyears. The Ministry of Industry and Trade should also be soft in implementation. For example, when the wind power scale of 20 wind cylinders has been approved, the investor still installed but by the time the firmbrought the machine to technology was different. Those 20 pillars were raised to a slightly larger capacity. Specifically, a turbine previously made 2.35MW but more than the following year has another life, this new technology was studied 10 years earlier and then applied to 4MW. Thus, with the planned land area, unable to exchange wind poles, investors should be encouraged to use new technology.

By Thanh Nguyen/ HuuTuc