The Vietnamese Government's top priority is to guarantee energy security and an ample supply of petroleum products under all circumstances for the remainder of the year.

EVN workers fix an issue on a power grid station during the dry season. Photo: Hoang Anh/The Hanoi Times

Prime Minister Pham Minh Chinh stressed the view in a directive sent to ministries and Government agencies, seen as a fundamental cornerstone and vital prerequisite for socio-economic advancement.

With regard to ensuring electricity supply, the Prime Minister has instructed the Ministry of Industry and Trade (MoIT) to promptly finalize a comprehensive plan to ensure electricity supply for the people's consumption, as well as industrial and commercial needs for the rest of 2023 and all of 2024.

This plan must be designed to completely avert electricity shortages and should be submitted to the Prime Minister for review before September 15, 2023.

The ministry is responsible for the effective and synchronized execution of pre-investment preparations for the 500 kV Circuit 3 line project from Quang Trach, Quang Binh to Pho Noi, Hung Yen, strictly adhering to regulations and striving to commence construction by September 2023.

Furthermore, it is essential to expedite the development of policy mechanisms that encourage the growth of self-generated and self-consumed rooftop solar power, as well as the establishment of direct power purchase and sale mechanisms (DPPA). A comprehensive report on these efforts should be submitted to the Prime Minister before September 15, 2023.

The immediate completion and submission of the Prime Minister's Directive on ensuring the supply of electricity, coal, and gas for power generation in the near future is essential, with the report to be delivered to the Prime Minister before September 15, 2023.

There have been occasional challenges in maintaining sufficient electricity and gasoline supplies, including instances such as regional electricity shortages in the north towards the end of the 2023 dry season and localized gasoline shortages in late 2022.

A recent World Bank study estimated that the economic ramifications of power shortages in May and June have amounted to approximately $1.4 billion, equivalent to 0.3% of Vietnam's GDP.

It has identified power outages as a significant factor, alongside weakened demand, affecting Vietnam's export-oriented processing and manufacturing sectors during the first half of this year.

Between late May and mid-June, the northern region of Vietnam experienced frequent power outages. This was mainly due to a surge in electricity demand coinciding with reduced mobilization of hydropower, one of the country's primary energy sources, due to drought conditions. Many businesses, situated in the northern industrial zones, experienced prolonged power outages lasting hours and, in some cases, even days during that period.

The $1.4 billion estimate provided by the World Bank is based on calculations of an unmet electricity demand totaling 36 GWh in 2022 and an expected 900 GWh shortfall expected for May and June 2023.

Furthermore, the World Bank's survey of Northern industrial sector businesses indicates that power outages have led to revenue losses of up to 10% for these entities. Additionally, based on projected supply shortfalls through June, the World Bank estimates that the unmet energy demand will result in revenue losses of approximately $75 million for the Vietnam Electricity (EVN).

In its July Business Climate Index report, the European Chamber of Commerce in Vietnam (EuroCham) anticipates periodic electricity shortages and recommends that the government place a strong emphasis on developing long-term energy plans.