Workers at a steel plant in the northern province of Thai Nguyen. National power utility Electricity of Vietnam said many steel producers in the country use outdated technology that consumes a large amount of power.
National power utility Electricity of Vietnam, regularly criticized for frequent power shortages and blackouts nationwide, this week pointed the finger at steel producers.
According to the utility, also known as EVN, part of the responsibility for power shortages in the country lay with steel producers, many of whom use outdated technology that consumes a large amount of power.
There are 65 steel projects in the country and even though they only operate at 50 percent of their capacity on average, they already consume about 3.5 billion kilowatt-hours per year, EVN said in a report submitted to Prime Minister Nguyen Tan Dung.
In order to meet their demand, the power sector has spent an estimated VND35.5 trillion on power generation and transmission facilities. As a result, power supply to other industries as well as for domestic purposes has been affected.
EVN requested the government to tighten control over the production technology used at steel plants. In fact, large steel producers should be compelled to build their own power plants, it said.
EVN said steel plants in Vietnam buy electricity at around 4.78 US cents per kilowatt-hour, compared to 8.12 cents in Thailand and 14.1 cents in Singapore.
Many foreign steel producers invest in Vietnam only because they want to take advantage of the low power prices and then export their products, the power utility said.
According to the Ministry of Industry and Trade's Energy Institute, power demand in Ho Chi Minh City only grew 7.7 percent over the 2008-2009 period even though the southern hub generates the highest GDP in the country.
Meanwhile, some other provinces reported much higher growth rates in power use because they house many power-consuming projects, the institute said. Power demand in the northern province of Quang Ninh, for instance, where there are large steel projects, increased by more than 15 percent during the period.
Pham Chi Cuong, chairman of the Vietnam Steel Association, admitted that most steel producers in the country use outdated and energy inefficient technology.
It requires 700 kilowatt-hours to produce one ton of steel billet and 120 kilowatt-hours to make one ton of products from the billets, Cuong said. That compares to per capita electricity consumption of only 867 kilowatt-hours per year in Vietnam.
An EVN official said the use of old production technology is a reason behind Vietnam's power shortage. "It takes between three and four years to build a power plant, so if power-consuming projects continue to be licensed like now there will never be an end to power shortage."
Power consumption in Vietnam is expected to surge by 17.63 percent this year.
The government said in a report last month that power cuts between April and July had negative impacts on production and daily life around the country. Prime Minister Nguyen Tan Dung has asked that construction of new power projects be speeded up and measures taken to ensure enough supply in coming years.
However, there has been no indication thus far that steel producers will be told to upgrade their technology and ensure efficient operations that will help the industry consume less power.