Companies feel the power pinch in Vietnam

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Scorching summer days. Water shortages. Not a winning combination, but if you add power cuts to the mix, the going gets a little too tough.

Many firms are also struggling. They are having to refuse customers' orders and suffer higher production costs, while laborers face lower income due to the power shortage.

Deputy Minister of Industry and Trade Nguyen Thanh Bien said the blackouts were being caused by thinner supplies from hydro-electricty plants that account for 34 percent of the total energy generation in the country. Droughts have made water levels plunge at many hydropower reservoirs since April, with some so low that the plants could not operate, he said.

At the same time, electricity demand was higher, giving the rapid pace of economic growth in the country, rising 22.7 percent in the first five months of the year over the same period last year.

The economy expanded 5.83 percent in the first quarter, compared with 3.14 percent a year earlier, according to the General Statistics Office. The government is targeting a gross domestic product expansion of 6.5 percent this year from 5.3 percent last year.

While power demand in Vietnam is set to rise 18 percent this year on the back of an economic recovery, the lack of water in reservoirs will translate into a loss of nearly 1 billion kilowatt-hours of electricity at hydropower plants, the government said in a recent statement.

Firms, laborers face losses

Dao Hong Cuong, general director of the Vietnam Sericulture Corporation, said: "Power cut happen every 2-3 days, and often last from 6 a.m. to 11 p.m. On these days, we have to ask laborers to be off work."

"Our product delivery is often delayed, affecting our credibility among customers," he said. However, the blackout does not always happen with previous notice, so employees have to wait for hours to continue their work. Cuong said his firm's output in May was down 30 percent due to the frequent power cuts.

"The electricity situation puts us in a dilemma. Sudden blackouts during the production process also lessen the products' quality," he said. Lower quality makes it difficult to sell them, as up to 90 percent of his firm's products are exported.

Meanwhile, the Lam Dong Province-based firm could not use generators because their capacity could only meet half the power needed by the firm for production, Cuong said.

His firm has had to ask employees to work overtime at weekends, but was still unable to meet the time of delivery of products. "Now, we are not worried about the shortage of orders, but the shortage of electricity," he said.

Nguyen Huu Tai, vice general director of Vietnam Tea Corporation, said: "Now is the time to harvest tea. But the purchase of tea from farmers is still slow with firms unable to dry the products due to the blackout."

Some tea processing establishments have used generators, which cost twice the price of electricity got from the national grid, and is not good enough for tea processing, he said.

Firms in the Mekong Delta province of Vinh Long are also feeling the heat. Nguyen Van Minh, head of the Office of the Management Board of Vinh Long Industrial Park, said blackouts happen 1-2 days a week, forcing firms to rearrange their production. As elsewhere, the days there is no power, workers have to take off, and accept lower incomes.

Minh says there are days when many firms in the IP have to close down because of the power cut.

"The electricity sector should report the power cut plans in advance to firms, and ensure that it is implemented accordingly, so that firms can rearrange their production."

Shortage to continue

The supply of electricity will be limited until flooding occurs in mid-June, raising the water levels in reservoirs, officials have said.

Dang Hoang An, deputy general director of the Electricity of Vietnam (EVN) said the national utility could supply 275 million kWh per day.

The Ministry of Industry and Trade recently asked EVN to mobilize power plants to operate at the maximum level possible and maximize power supply, especially from now to the end of this month.

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