Vietnam - News and Regulations

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POWER - Electricity market reform to be piloted next year

Vietnam would launch a pilot competitive market for electricity generation during the first six months of next year, deputy Trade and Industry minister Do Huu Hao revealed in Hanoi yesterday.

The preparation for the market was now "basically done," he told a workshop organised by the Electricity Regulatory Authority of Vietnam (ERAV).

It included market design, the way it would work and plans for its implementation.

The pilot market would provide a low-risk way to test market structure, its rules and procedures as well as identify and provide remedies for any deficiencies, the deputy minister said.

It would also allow participants to learn, practise and develop their skills for a competitive market

ERAV says the final market will start only when all generators can be paid in accordance with Vietnam Competitive Generation Market (VCGM) Rules and any deficiencies in those rules and procedures have been identified and remedied.

The gathering was used to introduce the VCGM's approved design; operation mechanism; market-based tariffs and implementation plan to industry representatives; international consultants and representatives of international organisations.

Cost-based model

The ERAV Electricity Market Unit director Pham Quang Huy said that after years of research, nine workshops and formal consultation with Electricity of Vietnam, PetroVietnam, the State-owned Lilama Corporation; the World Bank and the Asian Development Bank, the cost-based Gross Pool had been chosen as the market model for Vietnam.

The approval was embodied in Trade and Industry Ministry Decision 6713 of December 31, 2009 and its Circular 18 of May 10 this year, he said.

VCGM participants include entities competing in electricity generation and are: Power plants linked to the national grid with a capacity equal or higher than 30MW - excluding wind farms and geothermal plants, the Single Buyer - the Electricity Power Trading Company (EPTC); the Systems and Market Operator (SMO) - the National Load Dispatch Centre and service providers.

All the electricity generated by competing providers would be sold to the Single Buyer (EPTC), said marketing director Huy.

Their dispatch schedule would be based on their variable cost-based bids with the payment for the electricity made at either a contract or spot-market price.

ERAV's international consultant William Derbyshire told the workshop that the SMO would have primarily responsibility for collecting and managing market data.

Market monitoring and public data would be published weekly, monthly and yearly.

An independent auditor would make periodic checks of the SMO data and its compliance with VCGM rules.

ERAV would have responsibility for monitoring compliance with VCGM rules and penalties.

The penalties, as set in Decree 68/2010/ND - CP, include fines of up to VND40 million (US$2,100) as well as repair of the consequence and compensation for damage. INTELLASIA

FINANCE – BANKING - Vietnam banks race to maximise US dollar selling band

Just two days after the State Bank of Vietnam's decided to adjust up the dong/US dollar exchange rate by 2.1 percent, the US dollar sold by many commercial banks has officially skyrocketed to the ceiling price, while the average inter-bank rate stands still.

In the morning of August 19, many commercial banks has set the listed selling price in US dollar at 19,500 dong, dramatically maximising the allowed ceiling band of +/-3 percent based on the average inter-bank rate on the same day 18,932 dong. This ceiling took place at many members such as Eximbank, Asia Commercial Bank, DongA Bank, SeAbank, Saigon Commercial Bank and others.

Meanwhile, just very few banks that have offered lower US dollar rates included Vietcombank as this bank sold one dollar for only 19,460 dong, lower by 40 dong against other aforementioned members and this price was also offered by Sacombank.

According to Intellasia data, the purchase price of US dollars on August 19 also increased respectively, ranging from 19,400 to 19,430 dong per dollar against the previous day's about 19,100 dong.

Normally, the US dollar buying - selling price reflects a part of commercial bank's foreign currency status. And the simultaneous increase in both the US dollar purchasing and selling prices, especially the maximisation of the US dollar ceiling price, after the first day the new adjustment took effects, which has reflected more clearly on the shortage of their Forex status.

Regarding the significant price difference amongst bank members, a representative of a large size commercial bank that had sold out the US dollar for less than 19,500 dong, said that this might depend on the initiative of foreign currency resources of each bank member.

"Earlier, we forecast that the forex market might fluctuate strongly, so we decided to actively buy in more US dollars for forex reserves. On the other hand, our credit policies to support exports have shown much effectiveness as exporters are focusing on collecting sources of the greenback to sell to our bank. In addition, the growth of our remittance resources and large remittance market share has facilitated favourable conditions for us to buy in this source. Such advantages have helped us offer a lower dollar selling price," the representative said.

However, some sources are continuing to reflect that although the exchange rate has witnessed a strong growth, in fact there are circumstances where businesses must purchase at a higher listed US dollar price. On the other hand, the supply of the foreign currency is limited, so large creditors whose the selling price is considerably lower than many other smaller may find it difficult to keep up this move in the future.

"The foreign exchange rates suffer from many potential risks of sudden changes," Le Xuan Nghia, vice chair of Vietnam's National Financial Supervision Commission said. "There may be problems of foreign currency liquidity, and if the country isn't careful, it may have to cope with a shock of foreign currency liquidity."TBKT

COMPUTER /SOFTWARE - Hanoi announces software park urban area project
Hanoi Department of Architecture Planning officially introduced to public the detailed plan of Hanoi Software Part urban area of 1/500 and handed over to Long Bien Dist People's Committee and the project investor. Hanoi Electronic Corp (Hanel) is the main investor for this 413 hectare project to be sited in wards of Phuc Loi, Phuc Dong, Viet Hung and Gia Thuy, Long Bien Dist, Hanoi. In this project, the investor will focus on developing a modern urban area, combine with constructing a software park, in which 343 hectares will be used to construct the urban area including apartment buildings, green park, lake and other public facilities such as school, hospital and trade centre. Among the remaining 69 hectares, the investor will build the city's software park in an area of 32 hectares.INTELLASIA INDUSTROAL PRODUCTION - HCM City's industrial production value reaches 323tr dong HCM City's industrial production value gained over 323 trillion dong in first seven months of this year, contributing to a 13.6 percent rise over the same period last year, according to Hochiminh Industry and Trade Department. In only July, the value increased 3.8 percent over last month, rising nearly 17 percent year-on-year. At least 24 of the total 27 industrial sectors saw a rise against the same period last year, 12 ones contributed a sharp increase against the average one such as electric equipment, electric production, and delivery sectors. In first seven last months of this year, the sector of export software production obtained $500 million. As planned, the city's industry structure will get a sharp growth from now up to late 2011, said Nguyen Van Lai, director manager of the department.VNNEWS

INSURANCE - Insurance provider gains Jan-July profit of 38b dong

At the end of July, BIDV Insurance Co (BIC) reported gaining accumulative revenue of 413.95 billion dong, increasing by 54 percent against the same period of last year; and pre-tax profit of 38.24 billion dong, up 59 percent year-on-year.

In details, the company reported gaining revenue from insurance premium of 274.64 billion dong, up 62 percent over last year and profit from this business activity of 5 billion dong.

Up to late July, BIC's total asset value was estimated at 3.533 trillion dong, surging by 195 percent in comparison with that of December 31, 2009, and up 176 percent year-on-year. The ownership capital was posted at 548.27 billion dong, up 18 percent against the same period of last year, and standby fund of 203.61 billion dong, an year-on-year increase of 39 percent.

On August 5, Hanoi Stock Exchange (HNX) held the session to auction BIC shares with the average share price of 11,225 dong per share. At present, the company was preparing for organising the first shareholders meeting in early Sep 2010, and making auditing and capitalisation to transform into a joint stock company from October 1, 2010 and officially list shares in Q1 of 2011.VNNEWS

RESOURCES - PetroVietnam: Signed oil cooperation MoU with TNK-BP

State-run Vietnam Oil and Gas Group, or PetroVietnam, said Thursday it has signed a memorandum of understanding on oil and gas cooperation with Russia's TNK-BP.

PetroVietnam said in a statement the pact will enable the two companies to study the possibility of setting up an exploration and production joint venture in Russia.

TNK-BP will also study the options for expanding Vietnam's Dung Quat oil refinery, the company said.

State media said earlier this month deputy prime minister Hoang Trung Hai has approved a plan to raise the refinery's capacity to 10 million metric tonnes of crude oil a year, or 200,800 barrels a day, from the current of 6.5 million tonnes.

The company also said in the statement that TNK-BP will analyse the possibility of supplying crude oil to PetroVietnam, or its trading arm, PV Oil.ATM

POWER - Malaysian group wishes to invest $1.5b in thermo power industry

The Malaysia-based Janakuasa Holdings Group has entered the final phase of preparation progress for conducting investment project in Duyen Hai 2 thermo power plant, Quang Ninh province.

Ti Chee Liang, chair cum executive manager of Janakuasa Holdings has revealed that his group started negotiating about signing the electricity purchasing contract and BOT in mid-August. If there are no problems, the foreign investor will have completed all the negotiations by Q1 of 2011 and begin the construction works after that.

Duyen Hai 2 thermo power plant was one of the projects in Duyen Hai thermo power centre in Tra Vinh. Janakuasa Holdings planned to invest $1.5 billion in this 1,200 MW thermo power plant. The group expected to continue expanding business in Vietnam's energy markets via the success of this thermo power plant.VNS

Rotor installment for first turbine of Son La hydropower plant

The rotor for first turbine of Son La hydropower plant project is supposed to be officially installed on August 20, marking the important milestone for preparing to put into operation the first turbine of this hydropower plant by the end of 2010.

The rotor of Son La thermo power plant has total weight of 1,000 tonnes, with diameter of 15.8 metres and total height of 3.2 metres. It's the heaviest part among the equipment to be installed in the hydropower plant. Before installing the rotor, the contractors have already finished installing other equipment such as turbines, stato, lifting system etc.

After completing the rotor installation process for Son La hydropower plant, the contractors will start trial running for the supporting system in November, so as to start operation of the first turbine of Son La hydropower plant on December 25, 2010 to help solve the power shortage problems in dry season of 2011.

RESOURCES – MINING - Newmont considers IPO for 10pct of Indonesia unit
Newmont Mining Corp (NEM.N) is considering an initial public offering (IPO) for a 10 percent stake in its Indonesia unit PT Newmont Nusa Tenggara, and will decide at a shareholder meeting on Thursday, a shareholder document seen by Reuters showed. "We will hold an extraordinary shareholders meeting this week to decide an IPO plan to broaden PTNNT's financing options," said Rubi Poernomo, a spokesman for Newmont Indonesia.REUTERS