Summary


Vietnam has gone through a rapid increase in electrification since 1990 where electrification levels jumped from a pre-policy reform rate of less than 50% in the late 1980s–early 1990s to 77% by 2001 and 96% by 2009 [1]. The Electrification Programme driven by the Vietnamese government has resulted in increased access for 82 million people between 1976 and 2009. One million people primarily in the northern mountainous regions of Vietnam are currently without access to electricity.

 

Contents
  1. Objective
  2. Target Group
  3. Output
  4. Key Features of the Case
  5. Sustainable Financing
  6. Supportive Policies and Institutional Environment
  7. Building Local Capacity and Skills
  8. Community Participation and Including Local Stakeholders
  9. Achieving Co-Benefits
  10. Affordability and Technical Issues
  11. Local Champions
  12. Monitoring and Evaluation
  13. Replicability and Scaling-up
  14. Contact
  15. References and Further Reading

 

Objective


  • To electrify rural Vietnam

 

Target Group


Rural households

 


Output


  • The Electrification Programme driven by the Vietnamese government has resulted in increased access for 82 million people between 1976 and 2009.
  • As of 2010, it is estimated that 99% of the communes and 96% of the households in Vietnam have been connected to the grid.

 

Key Features of the Case


  • The Vietnamese authorities managed to successfully balance the sometimes competing interests of local, provincial, and central governments.
  • Government programs, combined with support from the government's development partners created an institutional structure for rural electricity supply, which bodes well for long-term sustainable development.
  • The country managed to continuously tackle and adapt to changing challenges over time.

 

 

 

Sustainable Financing


The financing of this programme has been particularly successful, as funds for rural electrification were mobilized from practically every possible source and in different ways:

 

  • Central government budget: Even in times where the central budget has been scarce, the limited funds available were reserved for the connection of district centers, mountainous areas, and densely populated centers.
  • Cross subsidies: Under this approach, each kWh consumed by urban customers would be subject to a surcharge to support the development of rural networks. Ho Chi Minh City, Hanoi City, and some provinces have applied this method to mobilize funds for their rural electrification efforts. For example, Ho Chi Minh City collected about VND 760 billion (about US$60 million) in 1998.
  • Customer contributions: At times, it was a must for customers to pay for a share of the cost of grid connection. The amount of the contribution varied across locations, depending on the availability of funds from other sources.
  • Borrowing: Many agriculture cooperatives and communes borrowed from commercial banks to finance the development of the LV system in their areas.
  • International donors: From 1994 onwards, international donors and nongovernmental organizations (NGOs) started supporting rural electrification efforts. For example, from 1996 onwards, the Japanese government made funds available to some provinces, through MPI, and OPEC directly provided US$10 million assistance to Quang Nam Province. These sources become increased over time.

 

Supportive Policies and Institutional Environment


As this programme has been Government led, there has been a continuous commitment towards the programme throughout the years. This is seen through the comprehensive Government initiatives taken to support rural electrification. The first turning point for rural electrification, was the introduction of the Doi Moi or Renovation Policy in 1986, which improved the affordability of electricity service extension, and made credit available so that households could borrow to pay for their share of new electricity connections.

 

Many more policies along the way have been introduced to support this programme and the Government has set ambitious targets. One such target include the resolution of the Eighth Party Congress in 1996, which set a clear target for 100 percent of districts, 80 percent of communes, and 60 percent of rural households in Vietnam to be connected to the national power grids by the year 2000.

 

Laws have also been set in place to support the programme. In December 2004, Vietnam's first Electricity Law was passed by the National Assembly of Vietnam. This law included a chapter dedicated to "Electricity for Rural, Mountainous, and Island Areas."

 

Also, it appears that elctrification has been strongly connected to other development strategies. For example, in 1998, the government approved a national program for poverty reduction, known as the "135 Program". One of the objectives of this program was the development of infrastructure services, such as electricity, roads, schools, and clinics in those communes. Many communes chose to use funds from this program for developing LV systems in their communes.

 

Building Local Capacity and Skills


Vietnam Electricity (EVN) helped build local capacity by providing training to local people and assisting local authorities in system planning and design.

 

Also, the Power Corporations (PCs) provided training to a large number of local people, who then became "service agents" responsible for routine technical and commercial operations and maintenance, such as meter reading, billing, collections, monitoring of rights-of-way, and minor repair
of in-house wiring. There were several benefits to this approach:

(a) reduction in operating costs;

(b) additional employment opportunities for local residents;
(c) better routine right-of-way checks;

(d) faster communication in case of emergency;

(e) greater ownership by the commune and a high level of payment; and

(f) an increase in the safety awareness of the community.

[2]

 

Community Participation and Including Local Stakeholders


An important element of succes to the REP was local participation in the construction and operation of the new rural electricity supply networks. The project was designed in a way to ensure local participation in all phases of the work.

 

For example, instead of focusing on a single contractor, contracts for construction work focused on maximizing participation by local entities. During the construction of individual local networks, local participants were given an opportunity to bid for construction contracts or provide other services in support of construction. Local authorities were given the authority to approve the completion of all local contracts by the contractors. As a result of this approach, more than 600 contracts were assigned to local contractors. A great amount of resources was required for supervising this high number or resources, however, the decision to proceed with multiple contracts enabled a rapid pace of electrification, while the decision to engage local contractors provided employment to the local communities, built capacity for future activities, and helped ensure local support for the successful operation of the rural networks.

 

Another example is that it was agreed that the communes would participate in the operation and maintenance of the local systems. Therefore, the PCs provided training to a local people, who then became "service agents" (see "Building Local Capacity and Skills").

[2]

 

Achieving Co-Benefits


The Rural Electrification Programme was actively integrated with broader development agendas. Rural electrification has been a critical component of the government's program to eliminate poverty, redress imbalances in development, and improve overall welfare levels by providing reliable lighting sources, better living conditions, health care, and other services to the rural world [2].

 

From survey results, it is difficult to be definitive about the direct poverty reduction impacts of electrification [2]; however, in a case study made by the Chronic Poverty Research Centre, access to electricity at the household level and to upper secondary school and health centre at the village level is only found to have raised the chances of escaping poverty for rural Kinh-Hoa households [3].

 

 

 

Affordability and Technical Issues


To assure affordability for the poor, the Government, among various initiatives, chose to set a ceiling price for rural household electricity use in 1998.

 

Local Champions


Government of Vietnam

 

Monitoring and Evaluation


To quatify the social and economic impacts of rural electrification, and to assess the effects of rural electrification on welfare under the project, a monitoring and evaluation plan was developed. It was given priority by the Governement of Vietnam, as monitoring and evaluation would enable policy makers and international development agencies to understand better the nature and extent of household welfare benefits attributable to rural electrification.

 

The Institute of Sociology of the Vietnamese Academy of Social Sciences, with funding from SIDA and New Zealand Aid, was given the task to conduct a longitudinal survey of the beneficiaries of the project, covering rural households with varying social and economic conditions. As part of the longitudinal survey, a panel of households was surveyed three times over a six-year period—the first in 2002, the second in 2005, and the third in 2008. A representative sample of 30 households
was drawn from each of 42 communes in 7 provinces.

 

The assessment also included control groups living in already electrified areas, as well as in unelectrified areas. This would enable more general conclusions to be drawn about the longer-term impacts of electrification on poverty alleviation and rural development.

[2]

 

Replicability and Scaling-up


Some portions of the Vietnamese experience with rural electrification are specific to the social, political, and cultural context of the country, and hence, some parts of Vietnam's experience may not be easy to replicate elsewhere. An example is the unique opportunity presented by the focus on unification of the country after the war, which in turn contributed to the broad support for the 500 kV line to connect the northern and southern parts of the country. Another is the abundance of generation resources that became available in the early 1990s, which, combined with the completion of the 500 kV line, made it possible to respond to the society's strong demand for electricity.

 

Certain features of Vietnam's experience, especially the ways in which the government managed to tackle the challenges that emerged, can provide useful lessons for other countries.

 

The practice of local involvement in management and operations of rural electricity networks, and particularly bill collection, can be easily adopted by other countries. The service agent model that was adopted in the early 2000s is a good illustration of the way in which this can be done. The service agent model helped ensure accountability within local communities and minimize nonpayment, in addition to reducing system losses and lowering system operation and management costs for the PCs. Overall, the involvement of local people in the management and operation of the LV system played an important role in ensuring the success and sustainability of the scaling-up of electricity access [1].

 

Contact


Institute of Energy Science of Vietnamese academy of science and technology
Manager: Mr. Doan Van Binh

Address: House A9, No 18, Hoang Quoc Viet Street Cau giay district, Hanoi
Telephone: (84) - 4 - 7912225 - Fax: (84) - 4 - 7912224

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. - Website: www.ies.vn

 

Vietnam Electricity (EVN): www.evn.com.vn

 

References and Further Reading


[1] Asian Development Bank (2011): ENERGY FOR ALL, Viet Nam's Success in Increasing Access to Energy through Rural Electrification. Asian Development Bank, Phillipines. Full text download (external link)

 

[2] World Bank (2010): Asia Sustainable and Alternative Energy Program - Vietnam, State and People, Central and Local, Working Together The Rural Electrification Experience. World Bank. Washington DC. Full text download (external link)

 

[3] Nguyen Thang, Le Dang Trung, Vu Hoang Dat and Nguyen Thu Phuong (2006): Poverty, Poverty Reduction and Poverty Dynamics in Vietnam. Chronic Poverty Research Centre. Manchester, UK.

Full text download (external link)

Name:

Vietnam Rural Electrification Programme

Country:

Vietnam

Location:

Print

Implementer:

Government of Vietnam

Contact:

Institute of Energy Science of Vietnamese academy of science and technology
Manager: Mr. Doan Van Binh

Address: House A9, No 18, Hoang Quoc Viet Street Cau giay district, Hanoi
Telephone: (84) - 4 - 7912225 - Fax: (84) - 4 - 7912224

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. - Website: www.ies.vn

 

Vietnam Electricity (EVN): www.evn.com.vn

Technology:

Grid Electricity

Energy resource:

  • Unspecified grid electricity

Sub type:

    Sector:

    • Energy supply

    Service:

    • Electricity

    Grid:

    • National Grid

    Targeted area:

    • Rural

    Geographical scope:

    National

    Project status:

    Completed project

    Project start:

    1976

    End date:

    2009

    Implementing approach:

    Public

    Funding Type:

    • Grant

    Budget (Euro):

    >100,000