Reform lessons from electricity sector: nothing is impossible

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Electricity access is one of 10 indicators that measure the quality of the national business environment according to the World Bank global business environment ranking.

Reform lessons from electricity sector: nothing is impossible

VietNamNet would like to introduce an article written by Nguyen Minh Thao, PhD, head of Department for Business Environment and Competitiveness Research under Central Institute od Economic Management.

In 2013, Vietnam ranked 156th in terms of electricity access with six procedures which takes 115 days, and cost equal to 1,726.4 percent of GDP per capita.

The access-to-electricity index is defined based on criteria including procedure, time and cost to connect to the grid, reliability of electricity supply and transparency of electricity price.

The procedures include: 1/ clients register electricity use and get connection agreement (30 days) 2/ power company comes to sites to conduct survey for power supply (1 day) 3/ clients obtain license for digging roads for underground connection from the local department of transport (15 days) 4/ clients hire private companies to design and build outer works (63 days) 5/ clients get certificate for transformer station design from the Fire and Rescue Police Department and 6/ clients get electricity meters installed and sign electricity purchase agreements with power company.

Improving the electricity access quality was one of the issues regularly mentioned in the Government’s Resolutions 19 and 02 on business environment improvement and national competitiveness upgrading in 2015-2020.

In 2016, Vietnam witnessed initial improvement in electricity access index with the time needed for electricity access reducing by 66 days to 49 days. Since then, the index has been continuously improved based on the improvement of component indicators.

In 2020, the number of procedures decreased to four and the time reduced to 31 days, while the cost decreased to 994 percent of GDP per capita. The quality of electricity supply and transparency in price was high 7/8 scores. With the component indicators, Vietnam ranked 27th out of 190 countries, which meant a jump of 108 grades compared with 2015 (two more procedures were cut, the time was reduced by 84 days).

As such, Vietnam’s electricity access has improved significantly, an example showing that nothing is impossible in reforming the business environment.

Impressive results

How could Vietnam make such impressive results?

EVN (Electricity of Vietnam) , as the backbone enterprise in the power sector, took initiative in implementing Resolution 19 on electricity access improvement very early. It set up a taskforce in charge of implementing the resolution. It worked with the DoB team of the World Bank to learn about the methodology and the method of calculation electricity access index, and international lessons; conducted survey on the enterprises’ real situation of electricity access; defined procedures and time needed to fulfill the procedures.

This allowed EVN to find out problems and draw up the solutions to solve the problems. This method has been applied since 2014. Thanks to it, the solutions to improve the electricity access index are always specific, which can be supplemented, updated and renewed every year.

The solutions not only define the circulars and decrees that need amendment, but also put forward specific amendment requirements to directly settle defined problems in order to cut procedures and shorten the time needed to access electricity.

EVN always takes the initiative in joining forces with municipal and provincial authorities, and promotes cooperation among departments and districts’ people’s committees to solve problems within the local competence.

After related decrees and circulars are amended or supplemented, EVN implements the legal documents, organizing training courses and disseminating new regulations to 63 cities and provinces. It reports to municipal and provincial authorities and urges them to instruct local departments to implement the issues related to administrative procedure reform.

Thanks to this, 56 out of 63 cities and provinces have set a mechanism for interconnection in power supply through the medium-voltage grid between power companies and local departments and divisions.

However, it’s obvious that EVN alone is not enough to improve electricity access. The significant improvement is the result of the cooperation and support of ministries and branches.

Nguyen Minh Thao

The Central Institute of Economic Management

The consumer price index increased by 1.64% in January to July period, the lowest rate since 2016, with lower food and electricity prices after Government efforts to stabilise prices and support virus-hit citizens and enterprises in the pandemic.

The Vietnam Electricity Group (EVN) on June 29 signed a credit agreement with the French Development Agency (AFD) on a loan of $74.7 million euros to develop the expanded Ialy hydropower plant in the Central Highland province of Gia Lai.

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