VIETNAM'S ELECTRICITY SHORTAGES: THE ROLLING

UNCLAS SECTION 01 OF 02 HANOI 001239

SIPDIS

STATE FOR EAP/BCLTV and EB
USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO

E.O. 12958: N/A
TAGS: ENRG ECON EIND EINV VM
SUBJECT: VIETNAM'S ELECTRICITY SHORTAGES: THE ROLLING
BLACKOUTS HAVE BEGUN

REF: A) HANOI 857, B) HANOI 773 C) HCMC 329


1. (SBU) SUMMARY: Vietnam is facing a serious electrical
shortage in the North this summer and the nation's power
producer, Electricity of Vietnam (EVN),has begun
instituting rolling blackouts in Northern Vietnam. With
high summer temperatures and a prolonged drought that has
nearly emptied many of Vietnam's reservoirs used for
hydropower plants, EVN faces considerable pressure to keep
the lights on in the next few months. EVN is scrambling to
upgrade the North-South transmission lines and procure
additional power from its Northern neighbor, China. The
power shortage is so serious that EVN has recently
publicized power conservation tips and informed consumers
that rolling blackouts will be a continuing problem in the
immediate future. Hospitals, national defense institutions,
Vietnamese government headquarters, television and radio
stations and "vital production sectors" will have a
continuous supply of electricity, but households and
businesses without generators will be left in the dark
temporarily until the situation improves. In southern
Vietnam, the situation is not nearly as dire; ConGen
contacts report only a sporadic need for scheduled outages.
End Summary..


2. (U) Due to Vietnam's rapid economic expansion and
industrial efforts in recent years, the electricity
consumption usage rate in Vietnam has grown substantially.
In 2005, the usage is one and a half times higher than 2004.
EVN estimates that electricity consumption in Northern
Vietnam during the first half of this year will reach 68-70
million Kwh per day. The power industry in the south
reports that Vietnam will need the equivalent to a new 715-
megawatt power plant every year for the foreseeable future
to keep up with growing demand (see reftel C). Along with
the hot and humid weather, new building and home
construction is driving up electricity demand in the North.
Electricity supply has not been able to keep up with demand
and as a result, EVN estimates that consumption will have to
be reduced 6-7 million kWh per day or the equivalent of ten
percent of the total electricity consumed daily in Northern
Vietnam. EVN is struggling to meet these cuts by asking the
public to conserve energy and by instituting rolling
blackouts throughout Northern Vietnam.

NO RAIN ON THE HORIZON
--------------


3. (U) A prolonged drought has severely curtailed normal
hydroelectric power generation in recent months (see reftel
B). Hydropower accounts for approximately thirty nine
percent of the country's power generation. With high
temperatures in the mid to high 30s centigrade around
Vietnam, water levels have decreased to dangerously low
levels in many hydro-power reservoirs. At the site of
Vietnam's largest hydroelectric power plant, Hoa Binh, the
water level is already below the dead water level. If the
Hoa Binh power plant ceases to operate, the country will
face an unprecedented shortfall of approximately 1900 MW of
power capacity. Unfortunately, the heavy rains in recent
days around Hanoi have done little to increase the reservoir
water levels, including the Hoa Binh Reservoir.


4. (U) In order to satiate the demand for electricity, EVN
is running all thermal power generating plants at full
capacity, increasing gas production to fuel power plants in
Southern Vietnam, and negotiating to buy 400 Mw of power
from China. EVN is also scrambling to complete a 500 KV
transmission wire linking the central city of Danang with
the North and upgrading their transformer grids. The south
currently supplies four million kilowatt hours per day to
Hanoi. Although these actions will help in the short-term,
what Vietnam desperately needs is additional power plants
and rain. Without rain in the near future to fill the water
reservoirs, the current power outages in the North will
likely last for a few more months.

THE BLACKOUTS ARE HERE TO STAY FOR NOW
--------------


5. (U) According to Phan Thi Thuy Tien, Deputy Director of
International Cooperation at EVN, the current power problem
in Northern Vietnam is "very serious." EVN has even begun
informing Hanoi consumers of the rolling blackouts in
newspapers and has listed approximate times and locations of
where the rolling blackouts will take place. Only
hospitals, national defense institutions, Vietnamese
government headquarters, television and radio stations and
"vital production sectors" will have a continuous supply of
electricity. Other business concerns and households,
including all U.S. Embassy housing units, have been affected
by rolling blackouts. In fact, the sound of generators is
heard more frequently around Hanoi these days, especially in
the homes and businesses fortunate to own one. The Ho Chi
Minh City area experiences only sporadic power blackouts,
due in large part to the fact that the majority of the
region's power is generated by natural gas rather than
water. The Phu My power complex in Ba Ria-Vung Tau province
pipes in natural gas from offshore and generates enough
power to supply half the country.


6. (SBU) COMMENT: Even though EVN forecasted the
electricity problem in the north many months ago, EVN has
been slow to address the real issue of building new power
plants and implementing contingency plans. With no rain in
the horizon and no alternate sources of electricity
immediately apparent, the power situation in Northern
Vietnam is expected to worsen in the coming months.

BOARDMAN