VietNam Business

Tuesday, January 25, 2011

City to bury all overhead power lines by 2025

HCM CITY — The sight of overhanging cable tangles in most city streets could be thing of the past by 2025 if a project proposal to bury them goes according to schedule.

The HCM City Power Corporation (EVN HCM City) is putting final touches on its plan to go underground with all the city's power and communication lines.

The plan, estimated to cost about VND4 trillion (US$210 million), will be submitted to the municipal People's Committee next month.

The plan divides the project into three implementation stages.

In the first stage (2011-15), the entire medium and low-voltage power networks and communication lines in roads and alleys in central districts 1 and 3 will be laid underground.

Three to five major roads in each of the remaining districts will also have their cables buried underground during this period.

The first stage will need an investment capital of VND3.36 trillion to lay 9 km of high-voltage power lines, 300 km of medium – voltage power lines and 400 km of low-voltage power lines.

In 2016-2020, EVN HCM City will basically complete the task of laying all medium-voltage and low-voltage power networks and communications lines underground in all central and neighbouring districts.

The second stage will need an investment capital of VND383 billion.

In the final stage, 2021-25, EVN HCM City will basically complete burying power and communications lines in all the districts, new urban areas and industrial parks.

EVN HCM City carried out a pilot project to bury cables last year on some roads in district 1, 3 and 5.

A stretch of Tran Hung Dao Street, that runs between its intersections with Nguyen Khac Nhu to Nguyen Van Cu streets in District 1, became the first site in the city to have power networks and communication lines go underground.

In District 3, work to bury the cables is ongoing on Truong Dinh, Le Quy Don, Pasteur, Pham Ngoc Thach and Nguyen Thi Minh Khai Street.

About 90 per cent of power networks and communication lines on Le Thanh Ton Road in District 1 have been laid underground.

This month, EVN HCM City plans to begin the work on Nguyen Trai Street. — VNS

Power cuts expected for months to come

Vietnam is faced with occasional power shortages during the next two or three months – and the situation is not forecast to improve in the new year.

Statistics from State-run Electricity of Vietnam Group (EVN) show that in the first nine months of the year, total water in national reservoirs was 33.3 billion cubic metres less than at the same period last year.

This is sufficient to cause hydro-power shortages of up to 6 billion kWh.

Total electricity production from all sources last month amounted to just over 8.6 billion kWh, up 15 per cent on the same period last year.

Reduced water levels have left power authorities perplexed at the possibility of power shortages and cut-offs in the near future as well as shortages next year.

To deal with the issue, Prime Minister Nguyen Tan Dung has asked the EVN to regulate power supplies for production and consumption and to try and limit cutting supplies.

He said the sector should mobilise oil-fired and coal-fired power plants, bring newly-built plants into operation and promote the saving of power among the population.

Deputy general director of the EVN Dang Hoang An said hydro power normally produced more than 59 per cent of total needs.

He said while the sector might be able to meet demand for 25 billion kWh in the last three months of this year, an additional problem was the temporary closure of Ca Mau Gas Factory PA3 pipelines for maintenance.

Ta Van Luan, director of Yaly Hydropower Plant, said water levels at Pleikrong Reservoir were about 537m, compared to 570m for the same period last year.

He said he did not expect the situation to improve in the near future and that the plant had been operating only five hours a day, lower than full capacity.

A similar situation is being experienced at the largest Yaly Hydropower Plant, which has a water level of 490m, 25m lower than average level last year.

Luan said water flow into Yaly reservoir was 160cu.m a second, but its four turbines needed 420cu.m a second to reach full capacity.

He said in the first nine months of the year, the plant had run at half of its capacity because of the low water levels.

And that some water would be saved for next year. The plant is expected to supply 4 billion kWh this year, compared to its expected production of 5.5 billion kWh.

Reservoirs in the Central Highlands and the south are facing drought.

Le Van Quang, deputy director of Da Nhim-Ham Thuan-Da Mi Hydropower Company said the water level at Ham Thuan was only 39cm above the lowest level and supplied water for electricity for only eight hours a day.

He said the 400MW Tri An Hydropower Plant had received 4.1 billion cu.m, 2 million cu.m lower than at the same period last year. Its water level was less than a metre above the lowest level.

Director of Tri An Hydropower Plant Nguyen Kim Phuc said low water levels had reduced expected electricity production this year to 1-1.2 billion kWh, the lowest level in 23 years of operation.

Coal imports to start in 2015

Australia and Indonesia, Viet Nam can also obtain coal from Russia by buying stakes in mines there or purchasing rights to mine or buy coal. — VNA/VNS Photo Duy Khuong

HCM CITY — Viet Nam is now likely to import coal only from 2015, not 2013 as earlier forecast since many thermal power plants have fallen behind schedule.

The steering committee managing coal imports said, however, that firms should start looking for foreign coal suppliers immediately to ensure there is no delay.

"Besides Australia and Indonesia, Viet Nam can also source coal from Russia by buying stakes in mines there or purchasing the right to mine or buy coal," Nguyen Manh Quan, a member of the committee and the head of the Heavy Industry Department, said.

But he was unsure if power-plant investors would begin looking for coal sources any time soon.

Tran Chien Thang, deputy general director of the Viet Nam National Coal and Mineral Industries Group (Vinacomin), said the Government had tasked his firm with importing coal for power plants but no investor had discussed the issue yet.

"Enterprises, especially State-owned ones, prefer local sources because costs are partly subsidised by the Government," Quan said.

A private firm recently signed an agreement with a foreign supplier to buy coal for 20 years and was willing to import more to supply other companies, Ta Van Huong, director of the Energy Department, said.

An Vien Group and VinCom Group informed the Ministry of Industry Trade that they could help local firms source coal from Russia, Minister of Industry and Trade Le Duong Quang said.

However, more companies can enter the coal import business as long as they follow Government rules, according to the ministry .

The steering committee will draft a legal framework to regulate coal imports.

It is not clear yet but Viet Nam may have to import between 3 million and 15 million tonnes of coal a year by 2015 – and 21 million to 40 million by 2020 – as more and more coal-fired power plants are built, Vinacomin has said. — VNS

Third private carrier flies Viet Nam's skies

KIEN GIANG — Air Mekong, Viet Nam's third private airline, received its Air Operator's Certificate from the Civil Aviation Administration of Viet Nam (CAAV) in southern Kien Giang Province on Friday.

On the same day, the carrier also launched its first two routes, Ha Noi – Phu Quoc and HCM City – Phu Quoc.

"The Vietnamese aviation market is dramatically developing. The aviation demand, especially for domestic flights, will increase considerably in the next few years," said CAAV deputy director Dinh Viet Thang.

"The introduction of Air Mekong is essential to meeting market demand, diversifying aviation services and increasing competitiveness," Th¨¨ang said.

"The CAAV's certificate will open up a new page for our development", said Air Mekong chairman Doan Quoc Viet.

Air Mekong would start commercial operations since Saturday with eight flights from Ha Noi and HCM City to Phu Quoc, Con Dao, Buon Me Thuot, Pleiku, Viet said, adding that they would expand operations to 10 flights from November including destinations of Da Lat in the Central Highlands and Da Nang City.

The airline has launched a promotional offer until November 9 with 1,000 tickets at prices ranging from VND400,000 to VND1.2 million (US$20.50-$61.50) for flights on all its domestic routes. Tickets are on sale at travel agents and via Air Mekong's website and customer care centres.

Air Mekong was establish in 2009 by Ha Long Investment and Development Company and is based at Phu Quoc Airport. The existing two private carriers operating in Viet Nam are Indochina Airlines and VietJet AirAsia.

The CAAV said there were also a number of other organisations and individuals planning to launch airlines. To qualify, private operators must have a charter capital of at least VND500 billion ($26.3 million) to fly internationally and VND200 billion ($10.5 million) to launch domestic flights. They must also meet strict aviation and security standards. — VNS

IFC to buy 10% stake in Vietinbank for $190 million

HA NOI — Vietinbank agreed yesterday to sell a 10-per-cent stake in the firm to International Finance Corporation (IFC) for US$190 million. The deal makes Vietinbank the first partly equitised State-owned bank to become part-owned by a foreign strategic investor. It made its initial public offering 22 months ago.

The price was set by the Government, the Ministry of Finance and the State Bank of Viet Nam.

IFC will support Vietinbank with technologies, international business development and management.

Viet Nam's largest partly-private lender announced yesterday its total assets at the end of August had risen nearly 30 per cent from the end of 2009 to VND320 trillion ($16.41 billion).

In the first eight months of this year, the Ha Noi-based lender raised more than VND290 trillion in deposits and lent VND199.5 trillion. Its bad debt stood at 1.05 per cent of all loans, below an annual target of 2.5 per cent for 2010.

The bank plans to pay a dividend of 20 per cent of its shares' face value of VND10,000 for 2010, higher than its initial target of around 15 per cent, the statement said, without giving profit figures for the eight-month period.

Vietinbank expects to increase its charter capital to VND23 trillion ($1.18 billion) by the end of the year, and the figure is slated to reach VND35 trillion ($1.8 billion) next year.

"By helping Vietinbank build up its capacity and strengthen its products and services, IFC will assist the bank in reaching more small – and medium-sized enterprises through its nationwide network," said Simon Andrews, IFC regional manager for Viet Nam, Cambodia, Laos, and Thailand.

"The proposed engagement will help Vietinbank further develop as a leading SME and underlines IFC's support for the Government's equitisation programme in the financial and banking sectors."

The Ha Noi-based bank also plans to sell a stake of 15 per cent to Canada's Bank of Nova Scotia to raise its registered capital by 35 per cent to VND15.1 trillion. The deal is expected to be finalised in December.

Shares of Vietinbank (coded CTG on the HCM City Stock Exchange) closed last Friday at VND18,700 per share.

Vietinbank went public in December 2007, becoming the first State-owned bank to do so.

However, it has struggled to find a foreign strategic investor. — VNS

Going rogue

Vietnam’s brokers are anxious for more investment options – so anxious that they’re taking matters into their own hands

An investor checks stock prices at Ho Chi Minh City Securities Corporation. Many securities firms believe that the market will benefit from new products and risk mitigating measures.

Securities companies are asking authorities to give them more autonomy so that they can diversify their products for the good of the market.

Industry insiders have expressed dissatisfaction that, after ten years of operation, Vietnam’s stock market is still limited to just a few basic products such as shares, bonds and fund certificates.

Over the same period, the stock regulator has not approved any new products.

Every time brokerages attempt to launch a new service, they have been ordered to stop. Derivatives like futures and options are not officially available in the country. Investors here are not allowed to buy stocks on margin nor conduct short-selling.

Some securities companies say they want to exercise the freedom to offer financial products that existing laws do not expressly prohibit. The State Securities Commission, in the meantime, argues that it is not the right time to introduce the products.

Speaking at a July conference in Ho Chi Minh City, Vice Chairman of the State Securities Commission Nguyen Doan Hung said eventually Vietnam’s stock market will need additional products. However, the appropriate launch time depends on the development of the market; it cannot be rushed.

The Vietnam Association of Securities Businesses has recently asked the State Securities Commission and the Finance

Ministry to legalize margin trading - in which investors borrow money from brokerages to buy shares with a loan of up to 50 percent of the shares’ value. The association also wants the authorities to allow investors to open multiple accounts and to both sell and buy the same stock in a trading session if they want.

“All of the nearly 100 members of the association support these requests and we hope that the authorities will facilitate a healthy development of the stock market soon,” said Nguyen Thanh Ky, general secretary of the association.

Nguyen Phuc Long, chairman of the Vietnam Industry and Commerce Securities Company, said securities firms should be at liberty to offer services whose risks they can manage on their own. Repurchase or “repo” transactions, for instance, should not be restricted.

Speaking on condition of anonymity, one official from a brokerage firm said delays in legalizing repo transactions, margin trading and multiple-accounts showed that the authorities have not succeeded in managing the market well.

The authorities were concerned about the negative impacts that these products might have on the market’s stability. But, since the market has been restricted for such a long time, many companies have broken the rules, making the market even harder to manage, the official said.

In a recent case, Hanoi-based VnDirect Securities Company launched a new options trading service.

The options were offered on around 20 stocks listed in the country’s two exchanges. Similar to the option-type derivative in other countries, the product gives the holder the right to buy (call option) or sell (put option) on a stock for a specific price and time period.

This product has not been approved by the stock regulator. Pham Hong Son, a senior official at the State Securities Commission, told Thanh Nien that the agency has not authorized derivatives on the local stock market. Therefore, if securities firms offer such products, they have to take full responsibility for the consequences.

Some experts do not support this type of derivative trading, either. Economist Le Dat Chi said if options are available across the market, the risks can be reduced. However, it will be really risky if only certain firms offer the product under the table.

Economist Le Tham Duong of the HCMC Banking University said options are a risk management instrument that can be used for all commodities including currency, gold, steel and coffee. But when abused for profits, options trading can become a form of gambling.

“Vietnam’s stock market is not ready for derivatives like options because of the limitations in management, market size and investors’ forecasting abilities,” Duong said. “The problem is when it’s difficult to identify the real motive behind the use of derivatives, the risks can’t be prevented.”

Many securities firms believe that the market will benefit from new products and risk mitigating measures.

Diversification would increase liquidity and help investors protect themselves better and give them more options to cut losses, they said. Many among this group have attributed recent market sluggishness to the limited range of products.

Vietnam’s share index has fallen 10 percent so far this year.

Ky of the Vietnam Association of Securities Businesses said it’s urgent that the authorities start approving “healthy” products provided by securities firms as long as they follow international norms.

If this request is ignored, the association will take matters into its own hands and launch such products after making sure they don’t violate existing laws.