Recap on Vietnam power report Q1 2013
BMI has released Vietnam power report Q1 2013. The acceleration in real GDP growth in the second half of 2012 reinforces the belief that electricity consumption is poised for a stronger performance heading into 2013. Similarly, BMI holds a relatively constructive view for the expansion of the country’s power infrastructure on the back of the official launch of Vietnam’ s competitive generation market. Nonetheless, BMI reiterates that low tariffs , rising dependence on imported fuel (namely coal) and lack of regulatory clarity remain key downside risks
In previous quarter, BMI report had highlighted that adverse domestic and global macroeconomic trends would have likely resulted in weaker growth in electricity consumption over 2012 (especially as businesses and households cut back on spending and investment). Yet, BMI had maintained a more positive stance with regard to the longer term outlook; a position validated and strengthened by recent developments, which saw Vietnam’s real GDP growth accelerating from 4.7% year-on-year (y-o-y) in Q212 to 5.4% in Q312 and expectations for a decline in lending rates over the coming months creating scope for a robust rebound in private sector investment.
BMI relatively bullish long-term outlook for Vietnam’s power sector, predicated on its view that the country will see strong and prolonged economic growth, thus remains fully in place, and substantial revisions in historical data series and the availability of new information have actually prompted a further upwards revision of our short and long term forecasts across the power sector. Hikes in power generating capacity and significant improvements in the transmission and distribution (T&D) segment are a recognised necessity, with Vietnam’s Master Plan VII predicting that the country will need 75,000MW of installed capacity by 2020. In addition, the launch of Vietnam’s new competitive generation market (CGM) on July 1 2012 is certainly a step in the right direction.
(Source: BMI, ANT Consulting)