Vietnam Ministry Proposes Ending EVN's Single-Buyer Monopoly in Electricity Market

Overview

The Ministry of Industry and Trade (MOIT) has proposed abolishing the single-buyer model of Vietnam Electricity Group (EVN) in the draft Electricity Law, currently under review by the Ministry of Justice. This regulatory change aims to enhance competition in the wholesale and retail electricity markets, addressing long-standing inefficiencies in Vietnam’s power sector.

Key Facts

• The draft Electricity Law is being prepared by MOIT for appraisal by the Ministry of Justice.
• Vietnam’s competitive electricity market has operated for nearly 14 years (since July 1, 2012), but only in generation and wholesale segments.
• The proportion of power sources directly participating in the competitive market is low and declining, especially for new domestic gas, renewables, multi-purpose hydropower, pumped storage, and BOT plants.
• The single-buyer model, where EVN and its subsidiaries are the sole purchasers, limits competition in the wholesale market.
• Bilateral contracts between generators and buyers other than EVN have not materialized; most power purchase agreements are still signed with EVN.
• The draft law proposes expanding the direct power purchase agreement (DPPA) mechanism to include retail electricity units.
• Transitional policies will be introduced to shift existing PPAs signed by EVN to other wholesale buyers, such as power corporations.

What Happened

According to the draft Electricity Law being developed by the Ministry of Industry and Trade, the current single-buyer model dominated by EVN is a key barrier to a truly competitive electricity market. Despite nearly 14 years of operation, the market remains limited, with a low and declining share of power sources directly participating. Many new power plants, including LNG, renewables, and strategic hydropower, have not joined the market, complicating optimal system operation.

MOIT argues that abolishing the single-buyer model is necessary to develop an effective wholesale market and gradually implement a competitive retail market. The draft law includes provisions for transitioning existing PPAs from EVN to other wholesale buyers, such as power corporations, and expanding the DPPA mechanism to include retail electricity units. This would allow more participants and foster competition.

Market Context

EVN, as the state-owned monopoly in Vietnam’s power sector, has been the sole buyer in the electricity market. The proposed reform comes amid broader efforts to liberalize the energy sector and attract private investment. The move could significantly alter EVN’s role and revenue structure, potentially impacting its financial performance and operational dynamics. The stock is not publicly listed, but the reform may affect related listed companies in the energy sector on HOSE and HNX.

Strategic Significance

For long-term investors, the abolition of EVN’s single-buyer model signals a shift toward a more market-oriented electricity sector. This could create opportunities for independent power producers (IPPs) and private investors to directly negotiate power purchase agreements with buyers other than EVN, potentially improving pricing and efficiency. The reform also aligns with Vietnam’s commitments to renewable energy and grid modernization. However, the transition may face implementation challenges, including contract renegotiations and regulatory adjustments.

What to Watch

• Approval timeline of the draft Electricity Law by the National Assembly.
• Specific transitional mechanisms for existing PPAs and the role of EVN subsidiaries.
• Expansion of the DPPA mechanism and participation of retail electricity units.
• Impact on investment decisions for new power projects, especially LNG and renewables.
• Any changes in EVN’s financial structure or corporate governance as a result of the reform.