Vietnam calls for power plant loans amid electricity shortage

Hanoi - The Vietnamese government has urged domestic banks to provide loans for the country's energy industry to continue construction of electricity plants amid power shortages, local media said Friday. Deputy Prime Minister Hoang Trung Hai told four major banks at a meeting Thursday to continue implementing credit agreements they signed with the Electricity Group of Vietnam (EVN), the government said on its website. Hai told EVN and the banks, including Vietcombank, Vietinbank, Agribank and BIDV, to renegotiate the interest rates 'in accordance with the current situation.' Vietnam's inflation, which hit 18.44 per cent in the first six months of this year, has driven up annual interest rates to more than 19 per cent. 'From now to the end of the week, all the related sides must come to an agreement on the interest rate, otherwise, the state bank of Vietnam will set the rate,' Hai was quoted as saying. 'Banks and EVN must share the current difficulties for the general interests.' The director of the Vietnam Energy Institute (VEI), Pham Khanh Toan, has backed the government's call and says it is vital for banks to support EVN. 'It's very important for the banks to continue to provide loans for EVN to continue the construction of the plants,' Toan said. 'Otherwise, the shortage of power will be more serious and last longer.' EVN said Wednesday that Vietnam would be seriously short of electricity this month due to rapidly increasing demand and a slowdown in the construction of new power plants. The national power supply will be between 1,500 megawatts and 2,500 megawatt below demand from 7 am to 9 pm every day this month, according to EVN. The state power company planned to invest 43 trillion dong (2.6 billion dollars) in building 40 power plants and expanding the power grids this year. However, the government reports only 16.3 trillion dong (980 million dollars) was disbursed in the first six months of this year. The government said construction of 12 hydroelectricity plants and two thermoelectricity plants came to a halt in the first six months of this year due to a shortage of investment capital. It said EVN had not been able to arrange investment capital for the construction of five other power plants. In April this year, the Ministry of Industry and Trade predicted that Vietnam would continue to suffer from a shortage of electricity until 2020. The country's rapid economic growth, 8.5 per cent last year, has driven typical demand for electricity up to 13,000 megawatts, while supply is just 12,000 megawatts. Vietnam currently imports 400 megawatts of electricity from China, although this is still not enough to meet demand. The country has declared it will build two nuclear power plants, each featuring two 1,000-megawatt reactors, with construction slated to begin in 2013 and power generation commencing by 2020.