Power-hungry Vietnam needs to raise up to $150 billion by 2030 to develop its energy sector, according to a World Bank official.
Vietnam, one of the fastest-growing economic country of Asia, has been struggling to develop its energy industry due to a lack of state funds, reports Reuters.
The Southeast Asian country’s hydropower potential has almost been fully exploited, oil and gas reserves are running low, and Vietnam recently went from a net exporter to net importer of coal.
“The financing requirements of the sector have been huge,” World Bank country director Ousmane Dione said on Monday.
“Since 2010, the sector invested about 80 billion dollars in generation, transmission and distribution and between now to 2030 another 150 billion dollars needs to be raised,” Dione said.
He said that electricity demand in Vietnam will grow by about 8.0 per cent a year for the next decade.
Vietnam, the production hub for global companies such as Samsung Electronics, had difficulties raising funds for its energy sector.
Public debt in the country is close to a centrally-mandated ceiling of 65 per cent of gross domestic product.
Nguyen Van Binh, head of the ruling Communist Party Central Committee’s Economic Commision, said the issue was an “extremely difficult problem”, in a government statement about Monday’s meeting.
Vietnam should allow the domestic and private sector to play a “more prominent role in power sector financing” to raise funds outside its state budget, said Dione of the World Bank.
He said Vietnam needed to increase its renewable energy usage, and introduce a competitive power market, where higher electricity prices can attract private investment in energy.
Prime Minister Nguyen Xuan Phuc told Reuters in an interview earlier this year Vietnam plans to more than triple the amount of electricity it produces from renewable sources and push for a 26 per cent increase in household solar energy usage by 2030.
Vietnam has not been able to reduce its reliance on coal energy, which will account for 53 per cent of all energy generated in the country by 2030, according to its trade ministry.
Another challenge for the sector is “complying with the government’s objectives to reduce greenhouse gas emissions and meet its climate change targets,” Dione said.
“That of course refers to the contentious issue on the role of coal in the future energy mix.”