Hanoi (VNA) – New financial sources,particularly from the private sector, will help Vietnam further develop itsenergy industry, according to a new World Bank report on maximising finance forVietnam’s energy development.

Titled “Maximising Finance for Development in Vietnam’s energy sector”, thereport said the changing macroeconomic and sectoral context in Vietnam requiresa new approach to financing electricity and gas investments. It presented anaction plan on how to unlock new sources of finance, especially from theprivate sector, based on a comprehensive analysis of investment needs as wellas constraints in the regulatory environment including the capital and forexmarkets.

Between now and 2030, Vietnam’s electricity sector requires new investments ofabout 10 billion USD annually, higher than the average of 8 billion USD for the2011–15 period. Meanwhile, the development of the gas sector is estimated to requireabout 20 billion USD between 2015 and 2035.

While Vietnam Electricity (EVN) and PetroVietnam (PVN) will continue to play animportant role in developing new infrastructure, the vast majority of new gasand electricity investments will need to come from private players. Moving intothis direction is in line with the Government’s strategy and objectives offinancing the energy sector in the future, said the report.

Given the limited fiscal space and the reduction ofconcessional financing available going forward, it will be important forVietnam to step up mobilising alternative capital resources for the electricityand gas sectors, said Ousmane Dione, the World Bank Country Director forVietnam.

He recommended that the Government should address comprehensively theconstraints currently impeding the flows of domestic and cross border privatecapital into two of the most strategic segments of the Vietnamese economy.

Granz Gerner, the World Bank’s Lead Energy Economist and the study’s leadauthor, said private investors are interested in Vietnam’s growing energysector, particularly the development of renewable energy and liquefied naturalgas.

What investors need is a transparent and stable regulatory environment whichincorporates a proper risk-sharing mechanism among all parties, he added.

To remove constraints and maximise financing available for electricity and gasinvestments in Vietnam, the report proposed a well-coordinated policy effortaround three pillars: developing a major PPP/IPP programme for new powergeneration, enhancing the financial standing and credit worthiness of EVN andPVN to enable them to access commercial finance without government support, andincreasing the availability of local currency financing which is critical forboth project finance and corporate project finance. - VNA