Many power plant projects are years behind schedule, hurting Vietnam's chances of fulfilling its goal of achieving a stable power supply, industry insiders said.
Experts have said that up to 90 percent of thermal power projects, including coal-fired and gas-powered plants, under Vietnam's 2006-2010 master plan, have not been completed yet.
According to the Vietnam Electrotechnical Industry Association, northern plants such as Hai Phong 2, Cao Ngan and Son Dong are now 28 months to three years behind schedule. Other projects like Duyen Hai 1 and Kien Luong in the south do not have enough funds to be implemented, according to the association.
Tran Viet Ngai, chairman of the Vietnam Energy Association, said many of the delayed projects have been contracted to Chinese companies and construction has been too slow due to outdated technologies, he said.
The new master plan, Plan 7, aims to increase Vietnam's power capacity to 75,000 megawatts from the current 24,000 megawatts by 2020. Ngai said that if progress on power projects fails to pick up, the country will not be able to reach its target and solve its power shortage problem.
Ta Van Huong, former director of the Energy Department at the Ministry of Industry and Trade, said Vietnam has been selecting contractors who offer the lowest prices. Chosen contractors are even allowed to bid for other projects.
As a result, contractors that have fallen behind on their projects have continued to be given more plants to build, Huong said.
Chinese contractors are able to bid half the price of what their rivals from developed economies can offer, and with its limited funds, Vietnam has to go with the lowest costs possible, he said.
"This is a never-ending story for Vietnam," Huong said.
State utility Electricity of Vietnam needs VND525 trillion (US$25.1 billion) to develop new plants over the next five years. So far it has managed to find only VND248 trillion and is now struggling with the rest of the financing.
Hoang Manh Dung, president of the Institute of Energy, said a typical power plant costs around $1 billion to build.
Dung, who helped map out Master Plan 7, said even foreign aid is hard to find these days. "Investors are often turned down by lenders because low power prices in Vietnam make power plant projects hardly viable financially."
Many investors, therefore, favored Chinese contractors, who agree to cover most of the costs in advance before receiving payment later, he said.
"Everyone can see where the problem lies. But then what can one do without money?" Dung said.
The Vietnam Energy Association said the government needs to help power investors overcome financial difficulties by easing credit policies, issuing bonds and arranging foreign loans for power projects.
The government should also offer incentives and encourage investors to partner with foreign counterparts from the G7 leading industrial countries and European nations in order to ease the dependence on Chinese contractors, the association said.