Hanoi, October 2009

GROWTH RATE OF ELECTRICITY DEMAND Growth rate of Electricity consumption, period Growth rate of Electricity consumption, period : 14.9% Growth rate of Electricity consumption, period : Growth rate of Electricity consumption, period : 15.3% % T&D losses is reduced from 21.7% (1995) to 12.0% (2005); 11.4% (2006); 10.6% (2007) & 9.35% (2008)

11751 km23834 MVA 7101 km18639 MVA 3286 km 7050 MVA TRANSMISSION NETWORK AS OF 2008 Rural electrification as of % districts, - 97,2% communes, and - 94% rural households accessed to national power grids

NEW CAPACITY ADDED IN 2008 & 2009

THERMAL POWER PLANTS ARE UNDER CONSTRUCTION

Year Peak capacity demand according to the adjusted demand forecast - MW Total capacity to be put into operation according to MP 6 – MW Reserve rate (gross) of installed capacity - % : Power consumption increased by 15%/ann. 15%/year

The delay of power plant construction: 1. The global financial crisis; 2. Many projects are being constructed at the same time: =>For contractors: the coordination with the subcontractors is not harmonious in terms of financing, power resource, construction machines; => For project owners: lack of financing, capability of project management units, designing and supervising consultants, experience of project implementation. 3.The bidding work for selecting EPC contractors is complicated, bidding process is prolonged due to procedures of lending party; 4. The project area preparation is very difficult (no harmonious coordination between project owners and local governments, especially in big cities); 5. Land areas arranged for the power transmission line corridors are not included in the approved power generation development plans; 6. Many coal fired power plants could not find the coal supply resource

1.Focusing on the most necessary power plants in order to avoid spreading investment; 2.Reviewing electricity demand forecast for 5 next years; 3.Selecting power plants which must not be delayed; 4.If necessary, the project owner of a delayed important project shall be changed; 5.postponing un-urgent projects. 6.The coordination shall be harmonious between ministries, sectors in order to overcome barriers on finance release, resettlement, area clearance, etc.;

Policy of Vietnam Government is to diversify investment sources, encourage foreign investors in construction of power plants. However, there are some difficulties as follows: Electricity prices are still low Therefore, existing thermal power plants can buy coal at price lower than coal price in the region (regulated by the Government), leading to un- attractiveness of the new power plant projects ; The procedures for investors under the scheme of BOT are still complicated, with insufficient guidelines; The prices of equipment was suddenly increased, making increased production costs, reducing financial attractiveness of power generation projects; Only prices of Chinese equipment in some projects are low but quality is also low.

The 2009 the coal price for electricity generation is as follows: - coal dust 5: 405,500 VND/ton; - coal dust 4b: 442,000 VND/ton (increased by 27% with price in 2008)[1].[1] - The same coal quality for other domestic customers (624,000 VND/ton for coal dust 5; 793,000 VND/ton for coal dust 4b) - At present, coal selling price for domestic consumers (except coal for power sector) is lower by 10 % in comparison to the price of exported coal - domestic coal selling price will be gradually increased so that in 2010 the market coal prices will be applied [1][1] Circular No /TT-BCT dated 26/2/2009 by MOIT on regulation of electricity tariffs -year 2009 and guidelines for implementing.

Year Production - million tons Year Production – MCM Gas for power sector -MCM

- Total approved Coal reserved: 5.9 bill.ton - Potential of Sub-bituminous in Hung yen & Thai Binh areas : > 200 bill.ton - Master plan of coal sector development: Coal production: - ~ 45 – 50 MT in 2010; - ~ 60 – 65 MT in 2015; - ~ 70 – 75 MT in 2020 and; - ~ over 80 MT in Crude oil & Gas: Proven reserve: 1.05 – 1.14 bill. TOE Potential: 2.75 – 3.06 bill. TOE Crude oil production: up to 2015: 19 – 20 Mt 2025: 20 – 21 Mt (include. Import) Gas production: Gradually increase to 15 – 16.5 BCM in 2025

Peak Demand– MW15,803 % 31,194 % 51,104 % 74,277 % Total Installed Capacity – MW22,35844,58169,78197,761 Hydropower – PSPP8, , , , Coal thermal4, , , , Gas/Oil thermal-CCGT7, , , , Small Hydro & Renewable , , , Nuclear power plant---4, Import , , ,

Coal for Power Generation, Mt Total North North import Central-import Total South South import Country Demand for Gen Import Coal production, Mt Non-Power Demand Export Domestic for Power Gen.=(1-2-3) Balance: surplus & (import) (16.17)(36.71)

1.Adjustment power demand forecast; 2.Reviewing power plant Development schedule; 3.Diversifying power source: Hydropower, Domestic and import Coal, Gas- fired, Nuclear PPs, Renewable, import electricity…; 4.Back born 500kV line: 2 existing tie lines and extension to Lao PDR; 5.Import power from Lao PDR, Cambodia & China 6.Electricity price need to be increase in order to mobilize the investment, to convince energy saving…