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“ A Model for Sustainable Development of Grid Connected Renewable Energy in Vietnam ”

submitted by

Tran Hong Ky

M.Sc.-Thesis submitted as a partial fulfilment of the requirements for the degree

of

“ Master of Science (M.Sc.) in Energy Systems and Management “

SESAM - Sustainable Energy Systems and Management International Institute of Management

University of Flensburg, Germany

March 2003

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TABLE OF CONTENTS

CURRENCY EQUIVALENTS AND UNITS OF MEASURE .................................................................. VI

ACRONYMS AND ABBREVIATIONS.................................................................................................... VII

ACKNOWLEDGEMENTS.......................................................................................................................VIII

SUMMARY REPORT .................................................................................................................................. IX

ZUSAMMENFASSUNG............................................................................................................................. XII

1 BACKGROUND................................................................................................................................... 1

2 OBJECTIVE......................................................................................................................................... 3

3 METHOD AND METHODOLOGY .................................................................................................. 3

3.1 FIELD RESEARCH ............................................................................................................................... 3

3.2 METHOD AND METHODOLOGY........................................................................................................... 4

4 SOCIO - ECONOMIC SITUATION OF GIAP TRUNG COMMUNE.......................................... 7

5 LOAD DEMAND FORECAST......................................................................................................... 15

PRODUCTIVE USE ..................................................................................................................................... 18

6 HYDROPOWER POTENTIAL, SCHEME COMPONENTS AND COST ESTIMATION....... 22

6.1 HYDROPOWER POTENTIAL............................................................................................................... 22

6.2 HYDROPOWER COMPONENTS........................................................................................................... 26

6.3 COST ESTIMATION ........................................................................................................................... 29

7 OPTIMIZATION OF HYDROPOWER SCHEME........................................................................ 31

7.1 EXCEL MODEL ................................................................................................................................. 32

7.2 ECONOMIC ELECTRIFICATION COST ................................................................................................ 34

7.3 ECONOMIC BENEFIT OF INVESTMENT............................................................................................... 38

7.4 SUM UP ............................................................................................................................................ 40

8 ALLOCATION AND MOBILIZATION OF CAPITAL INVESTMENT.................................... 40

8.1 ALLOCATION OF INVESTMENT ......................................................................................................... 40

8.2 MOBILIZATION OF INVESTMENT CAPITAL ........................................................................................ 42

9 INSTITUTIONAL ISSUES............................................................................................................... 45

9.1 INSTITUTIONAL FRAMEWORK FOR POWER SECTOR .......................................................................... 45

9.2 NEW ELECTRICITY LAW AND THE IMPACT........................................................................................ 46

9.3 APPLICATIONS AND APPROVALS ...................................................................................................... 47

9.4 INSTITUTIONAL DEVELOPMENT ....................................................................................................... 48

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10 LEGAL FRAMEWORK FOR SETTING UP ENTERPRISE....................................................... 49

11 ECONOMIC AND FINANCIAL EVALUATION.......................................................................... 53

11.1 TARIFF STRUCTURE.................................................................................................................... 53

11.2 ECONOMIC EVALUATION............................................................................................................ 57

11.3 FINANCIAL ANALYSIS ................................................................................................................ 59

12 BUSINESS PLAN............................................................................................................................... 64

12.1 MARKETING PLAN ..................................................................................................................... 64

12.2 PRODUCTION PLAN .................................................................................................................... 65

12.3 ORGANIZATION & MANAGEMENT PLAN .................................................................................... 69

12.4 FINANCIAL PLAN........................................................................................................................ 69

12.5 COMMUNITY MOBILIZATION ...................................................................................................... 75

13 EXPECTED SOCIAL IMPACT OF HYDRO POWER SYSTEM ............................................... 76

14 RISK AND MEASURES TO OVERCOME RISK ......................................................................... 79

15 CONCLUSION AND RECOMMENDATION................................................................................ 81

BIBLIOGRAPHY ......................................................................................................................................... 84

APPENDIX 1 ................................................................................................................................................. 86

APPENDIX 2 ............................................................................................................................................... 103

APPENDIX 3 ............................................................................................................................................... 106

APPENDIX 4 ............................................................................................................................................... 118

APPENDIX 5 ............................................................................................................................................... 129

APPENDIX 6 ............................................................................................................................................... 146

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LIST OF TABLES

Table 4.1: Ranking of Development Priorities.................................................................... 12

Table 5.1: Typical household's electricity consumption profile.......................................... 17

Table 5.2: Electricity demand for Public/ services use ....................................................... 17

Table 5.3: Power demand for wood processing .................................................................. 18

Table 6.1: Main hydrology parameters................................................................................ 25

Table 6.2: Cost estimation................................................................................................... 30

Table 7.1: Economic Electrification Cost ........................................................................... 37

Table 7.2: Economic Benefit for Investment....................................................................... 39

Table 11.1: Purchasing tariff for Srok Phu Mieng hydropower .......................................... 57

Table 11.2: Economic avoided cost to EVN ...................................................................... 58

Table 11.3: Economic Sensitivity Analysis......................................................................... 59

Table 11.4: Financial Sensitivity Analysis .......................................................................... 63

Table 12.1: Maintenance Schedule for Civil Work............................................................. 66

Table 12.2: Investment Capital Contribution ...................................................................... 70

Table 12.3: Loan payment schedule .................................................................................... 71

Table 12.4: Yearly Cash Flow Statement............................................................................ 72

Table 12.5: Profit and Loss Statement ................................................................................ 73

Table 12.6: Balance Sheet ................................................................................................... 74

Table 12.7: Break-even point .............................................................................................. 75

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LIST OF FIGURES

Figure 3.1: Location map of Giap Trung commune.............................................................. 6

Figure 4.1: Village map of Giap Trung ................................................................................. 7

Figure 4.2: Distribution of Ethnic group ............................................................................... 8

Figure 4.3: Paddy rice in Giap Trung.................................................................................. 10

Figure 4.4: Proportion of household by well-ranking ......................................................... 10

Figure 4.5: Household Income Distribution........................................................................ 11

Figure 4.6: Pico using in Giap Trung .................................................................................. 13

Figure 4.7: Time for wood collecting of women................................................................. 14

Figure 5.1: Electricity demand for Giap Trung commune .................................................. 19

Figure 5.2: Daily load curve for the commune................................................................... 20

Figure 5.3: Energy demand projection ................................................................................ 21

Figure 5.4: Peak load projection.......................................................................................... 21

Figure 6.1: Catchment area of Giap Trung hydropower ..................................................... 23

Figure 6.2: Hydrological data for Giap Trung Hydropower ............................................... 24

Figure 6.3: Head loss and Turbine Efficiency..................................................................... 24

Figure 6.4: Power duration curve ........................................................................................ 25

Figure 6.5: Longitudinal cross section of Giap Trung hydropower .................................... 27

Figure 6.6: Location diagram of mini hydropower and transmission/distribution.............. 29

Figure 6.7: Comparison unit cost of small hydropower in Vietnam ................................... 30

Figure 6.8: Breakdown of Investment Cost......................................................................... 31

Figure 7.1: Excel Model Diagram .................................................................................... 33

Figure 7.2: Economic Electrification Cost .......................................................................... 38

Figure 7.3: Economic Benefit for investment ..................................................................... 40

Figure 8.1: Allocation of Investment Cost .......................................................................... 41

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Figure 10.1: Organization structure of Jointly Owning Utility ........................................... 50

Figure 10.2: Organization structure of Liability Limited Company ................................... 51

Figure 11.1: Economic Sensitivity Analysis ....................................................................... 59

Figure 11.2: Financial Sensitivity Analysis......................................................................... 64

Figure 12.1: Investment Capital contribution...................................................................... 69

Figure 12.2: Company capital requirement ......................................................................... 70

Currency Equivalents and Units of Measure

Currency Unit = Vietnamese Dong (VND)

VND 1,000 = US$0.065

US$1 = VND 15,400

Kg Kilogram

kVA Kilovolt Amp。

kW Kilowatt

km Kilometer

km2 Square Kilometer

m Meter

m2 Square meter

m3 Cubic meter

Mw Megawatt

ton Metric ton

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Acronyms and Abbreviations

BARD Bank for Agriculture and Rural Development EIRR Economic Internal Rate of Return EVN Electricity of Vietnam FID Fund for Investment Development FIRR Financial Internal Rate of Return GEF Global Environmental Facility GOV Government of Vietnam IOE Institute of Energy IPP(s) Independent Power Producer(s) FIRR Financial Internal Rate of Return JICA Japan International Cooperation Agency JIBIC Japan International Bank for International Cooperation LV Low Voltage MOI Ministry of Industry MOU Memorandum of Understanding MV Medium Voltage NPV Net Present Value O&M Operation and Maintenance PBP Pay Back Period PCF Protocol Carbon Fund PECC1 Power Engineering Consulting Company 1 PPA Power Purchasing Agreement SIDA Swedish international Development Agency SPP(s) Small Power Producers SPPA Standard Power Purchasing Agreement US$ U.S. dollar VND Vietnamese Dong WB World Bank

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Acknowledgements

I would like to convey my sincere gratitude to the German Academic Exchange Service

(DAAD) for the their support, which enabled me to pursue my post graduate on the

master’s course “Sustainable Energy Systems and Management” (SESAM), University of

Flensburg, Germany.

I would like to extend my deep appreciation to Professor Uwe Rehling for invaluable

contribution provided during my Master Dissertation work.

My sincere thanks goes to Dip. Ing. Wulf Boie for his regular guide, suggestion and

constructive feedback in my Master Dissertation work.

I would like to thank my teachers Dipl. Soz. Dorsi Germann, Ms. Christiane Delfs, Dr.

Roland Menges and Dr. Olav Hohmeyer for the knowledge I gained from them.

I specifically want to thank Mr. Alex Arter (Director of Entec AG), Mr. Ho Hao (PECC1),

Mrs. Tran Hai Anh (PECC1), and all my friends in Vietnam for their support during my

field research.

My thanks also goes to all my classmates and German students namely Stefan, Matthias

for their friendship provided to me during my staying in Germany.

Finally, I deeply thank my family members for always being with me, providing me their

support and encouragement for the study.

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Summary report

Vietnam is well endowed with hydropower resources, of which small hydropower is

experienced the cheapest and most reliable renewable energy sources, currently available

in Vietnam. However, exploitation of the renewable energy is still limited.

Renewable could play a significant role in electricity generating to provide to rural areas

aiming to improve their standard of living and encourage income generating activities. One

part of the ambitious Rural Electrification Program, which is carried out by Government of

Vietnam (GOV) and World Bank (WB), is to develop grid connected small hydropower.

The hydropower will provide electricity at relatively low price to local residents who are

not being able to access to electricity or are supplied by diesel generation with high cost,

and feed supplemental electricity into the national grid. GOV expects these projects will be

developed by non-utility investors. Participation of private sector will create a new form of

ownership and investment to Vietnam’s power sector that concerns investors, local

residents and GOV/Electricity of Vietnam (EVN).

The objective of the study is (i) to verify the feasibility and sustainability of the new

investment model in Vietnam in meaning of technical, legal and institutional, social-

economic and financial, and (ii) to analyze role of participants to assure sustainable

development of the model. Furthermore, the needed measure to promote development and

minimize the risk to the investment also discussed and recommended in detail.

To facilitate the study a hydropower potential site at Giap Trung commune, Northern

province of Ha Giang, Vietnam is taken into consideration.

Giap Trung is one of the poorest communes in Ha Giang province that listed among

communes being connected to national grid after 20101. While the power demand is very

low, the commune has considerable hydropower potential, which could be exploited to

provide electricity to the commune and feed supplementary energy into national grid.

To answer the question which option should be selected to electrify the commune, a

comparison is made for four possible options namely “Grid connected hydropower”, “Off

grid hydropower”, “connection to national grid” and “diesel generator”. The selected

1 According to the Master Plan Study in Rural Electrification, IoE, 1999,

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option should have the lowest cost for electrifying the commune. Based on the criterion the

option “grid connected hydropower” is selected since requiring the lowest cost (unit cost

3,980 VND/kWh and economic cost for electrification VND 6,012 million). From

investment point of view, however, the best option means creating maximum benefit to

society. Two alternatives, “grid connected hydropower” and “off grid hydropower”, which

could be used to exploit hydropower potential, were considered to find out the optimum

option for investment. The option “grid connected hydropower” is one time again to be the

better one (NPV = VND1, 593 million, IRR = 12.2% and unit cost 936 VND/kWh, 5 times

lower than that of compared alternative). Therefore, a grid-connected hydropower, which

will supply electricity to the commune and feed surplus power to national grid, is selected

for Giap Trung site.

According to Decree 45/2001/ND-CP2, of total VND 1,006.5 million investment cost for

the project, the investor, who acts as Small Power Producer (SPP) will contribute VND

5,852 million for hydropower plant and transmission lines to national grid. GOV and local

households will contribute the remaining, for the commune grid. To maximize benefit to

local households and assure the project could be well implemented, the commune grid is

supposed to be constructed and managed by the SPP. In order to meet investment capital

born by investor, SPP could mobilize from any possible source. The study, base on the

current situation in Vietnam, has dealt with the issue to find out the most possible financial

arrangement for the project.

Participation of private investors in power sector is new in Vietnam. This creates new form

of ownership and investment. Therefore, legal and institutional issues have been touched

upon. A number of legal company form are analyzed to find out the most suitable for the

project, that is Jointly Owning Utility forming by private investor and Ha Giang People

Committee. Basis points, processes, procedures, and approval for setting up a private

enterprise doing business in power field are also dealt with.

In order to evaluate the feasibility of the project on economic and financial aspect, a

comprehensive economic and financial appraisal has been done. Tariffs for retail sale to

local households is determined at level 1200 VND/kWh, which bases on willingness and

able to pay for the service of the local households and should cover the production cost of

2 Construction Publish House, Hanoi 2001, p. 39

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supplier. The economic benefit of power fed into national grid is valued equal to avoided

cost of EVN. Due to no SPPA available at present then the tariff at the rate of 582

VND/kWh on average, that is applied to other existing SPP in Vietnam, is used for Giap

Trung project Calculation results show that the project is economically viable (NPV =

VND 3,070.6 million, EIRR = 15.2% and Unit cost = 850.8 VND/kWh) bringing high

benefit to the whole economy. From financial view, the project is attractive investor since

having quite high financial indicators (NPV = VND 306.7 million, FIRR = 13.8% and Unit

cost = 618 VND/kWh). However the project will more attractive to investor if the tariff is

set equal to avoided cost for energy of EVN. In additional, sensitivity analysis also has

been done to verify the viability of project in reference cases.

In order to have a closer sight to the project, a business plan for the enterprise is set up.

Due to connect to national grid then project can sell 100% annual output at any year. Issues

on operation, repair and maintenance, training, billing and money collection have been

concerned. Especially, PPA(s) to households and to EVN are also dealt with. Financial

plan bring a more detail picture of financial statement presenting quite strong and stable

situation of the enterprise.

Along with development of the power project, community mobilization has to be done in

order to (i) maximize socio-economic benefit of the power plant; (ii) minimize risk. It

requires local resident, who are real beneficiaries, to participate in project promotion,

project preparation and project implementation actively and positively.

The social impacts of the project are generally positive. The project is seen to improve

standard of living of local households, and a key component in promoting the local

economic development. The people are provided a better service with lower cost compared

the energy sources currently used in the commune. Furthermore, they do not have to wait

for at least 7 year to connect to national grid.

In conclusion, the development model for Giap Trung grid connected hydropower is

feasible and sustainable, expected to be extended to other projects in Vietnam. It is

recommended that GOV, one of the participants and also market enabler, need to play

more active role, balancing interest among participants and have necessary measures to

promote the development model.

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Zusammenfassung

Vietnam ist mit Wasserkraft-Ressourcen gut ausgestattet, wobei eine Mikro-

Wasserkraftnutzung sich als die günstigste und verlässlichste Art der erneuerbaren

Energien, die zur Zeit in Vietnam realisierbar sind, herausgestellt hat. Allerdings sind die

Nutzungsmöglichkeiten erneuerbarer Energien dort immer noch begrenzt.

Erneuerbarkeit könnte eine wichtige Rolle bei der Energie-Erzeugung zur Versorgung

ländlicher Gebiete spielen. Dies soll dem Ziel dienen, eine Verbesserung der

Lebenssituation der Menschen in diesen Regionen zu erreichen. Eine Ziel des ehrgeizigen

Programms zur Elektrifizierung der ländlichen Gebiete, das von der vietnamesischen

Regierung und der Weltbank durchgeführt wird, ist es, ein durch Mikro-

Wasserkraftnutzung gespeistes Stromnetz aufzubauen. Dieses soll Haushalte, die ansonsten

keinen Zugang zum Stromnetz haben bzw. durch teuren Dieselkraftstoff versorgt werden,

und zusätzlich das nationale Stromnetz speisen. Die vietnamesische Regierung geht davon

aus, dass diese Vorhaben durch Investoren außerhalb der

Elektrizitätsversorgungsunternehmen entstehen wird. Die Beteiligung der Privatwirtschaft

wird für neue Eigentums- und Investitionsstrukturen im Bereich der vietnamesischen

Stromversorgung sorgen.

Die Zielsetzung der Untersuchung ist es (i), die Durchführbarkeit und die

Zukunftsfähigkeit des neuen Investitionsmodells in Bezug auf technische, gesetzliche,

institutionelle, sozio-ökonomische und finanzielle Belange und (ii) die Funktionen der

Beteiligten zu analysieren, um eine zukunftsfähige Entwicklung des Modells sicher zu

stellen. Des weiteren werden das notwendige Ausmaß an Förderung für die Entwicklung

und die Minimierung der Investitionsrisiken detailliert erörtert.

Um die Untersuchung zu stützen, wird ein Gelände mit Wasserkraftpotential bei der Giap

Trung-Kommune, der nördlichen Provinz von Ha Giang in Vietnam genauer betrachtet.

Giap Trung ist eine der ärmsten Kommunen der Ha Giang-Provinz und eine der

Kommunen, die erst im Jahr 2010 für den Anschluss an das nationale Stromnetz

vorgesehen ist. Da der Energiebedarf sehr gering ist, hat diese Kommune ein beträchtliches

Wasserkraft-Potential, was genutzt werden könnte, um die Kommune zu versorgen und

damit zusätzlich das nationale Stromnetz zu speisen.

xiii

Um die Frage zu beantworten, welche Möglichkeit gewählt werden sollte, un die

Kommune zu elektrifizieren wird ein Vergleich der vier Möglichkeiten erstellt. Diese sind

"Wasserkraftnutzung mit Anschluss ans Stromnetz", "Wasserkraftnutzung ohne Anschluss

ans Stromnetz", "Anschluss an das nationale Stromnetz" und "Nutzung eines

Dieselgenerators". Die gewählte Alternative sollte die geringsten Kosten für eine

Elektrifizierung der Kommune aufweisen. Basierend auf diesem Kriterium wurde die

"Wasserkraft mit Anschluss ans Stromnetz" gewählt(Kosten der Einheiten: 3.980

VND/kWh und Kosten für die Elektrifizierung VDN 6,012 Millionen. Aus dem

Blickwinkel der Investitionsmaßnahmen ist die beste Möglichkeit jedoch der

größtmögliche Nutzen für die Gesellschaft. In Bezug auf diesen Gesichtspunkt sind die

"Wasserkraftnutzung mit Anschluss ans Stromnetz" sowie "Wasserkraftnutzung ohne

Anschluss ans Stromnetz" die geeignetsten. Wiederum ist die erstgenannte Alternative die

beste (NPV= VND1,593 Millionen, IRR= 12,2% und Kosten der Einheiten: 936

VND/kWh, fünfmal weniger als bei den verglichenen Möglichkeiten). Daher wurde die

"Wasserkraftnutzung mit Anschluss ans Stromnetz" mit Nutzung der überschüssigen

Energie für das nationale Stromnetz als die geeignetste für das Giap Trung-Gelände

gewählt.

Gemäß der Verfügung 45/2001/ND-CP , von insgesamt 1,006.5 Millionen VND

Investitionskosten für das Projekt wird der Investor, der als "Small Power Producer" agiert,

5,852 Millionen VND für Wasserkraftanlagen und Fernleitungen zum nationalen

Stromnetz SPP) beisteuern. Die restliche Summe wird von der Regierung und den lokalen

Haushalten geleistet. Um den Nutzen für die lokalen Haushalte zu maximieren und

sicherzustellen, dass das Projekt gut umsetzbar ist, soll das kommunale Stromnetz offenbar

von der SPP erläutert und gemanagt werden. Die Untersuchung, die auf der momentanen

Situation in Vietnam basiert, hat sich mit dem Sachverhalt beschäftigt, wie man das

bestmögliche finanzielle Arrangement für das Projekt schafft.

Die Beteiligung privater Investoren auf dem Energiesektor ist neu in Vietnam. Diese führt

zu neuen Formen von Eigentum und Investition. Daher wurden im Anschluss auch

rechtliche und institutionelle Voraussetzungen angerissen. Es werden verschiedene

Rechtsformen analysiert, um die geeignetste für das Projekt zu finden. Als sinnvollste

stellte sich die "Jointly Owning Utility" heraus, bei der es mehrere Teilhaber gibt. In

diesem Fall sind dies mehrere Privatinvestoren und das Ha Giang People Committee.

xiv

Verschiedene Arbeitsverfahren und das Erhalten einer Genehmigung für ein Unternehmen,

das Geschäfte auf dem Energiesektor macht, wurden ebenfalls behandelt.

Um die Umsetzbarkeit des Projekts hinsichtlich der finanziellen und ökonomischen

Aspekte zu bewerten, wurde eine umfassende ökonomische und finanzielle Einschätzung

vorgenommen. Die Tarife für den Einzelhandelsverkauf an die lokalen Haushalte wurde

auf den Level 1200 VND/kWh, die auf der Bereitschaft und Zahlungsfähigkeit der lokalen

Haushalte basiert, für den Service zu bezahlen. Dies sollte die Produktionskosten der

Lieferanten abdecken. Der ökonomische Nutzen der ins nationale Stromnetz gespeisten

Energie wird gleich hoch bewertet wie die vermiedenen Kosten von EVN. Infolge der

Tatsache, dass dort zur Zeit kein SPPA verfügbar ist, wurde die Tarifrate von 582

VND/kWh, die im Durchschnitt für die in Vietnam existierenden SPPs gelten, für die

Berechnungen bezüglich Giap Trung zugrunde gelegt. Die Kalkulationen zeigen, dass das

Projekt machbar ist und für die ganze Wirtschaft von Nutzen sind (NPV =VND 3,070.6

Millionen, EIRR =15.2% und Einheitskosten = 850.8 VND/kWh). Unter finanziellen

Gesichtspunkten ist das Projekt ebenfalls attraktiv, da die Investoren hohe finanzielle

Indikatoren haben (NPV =VND 306.7 Millionen, FIRR =13.8% und Einheitskosten

VND/kWh). Zusätzlich wurde auch eine Anfälligkeits-Analyse erstellt, um die

Zukunftschancen des Projekts auch in dieser Hinsicht zu erörtern.

Um einen noch genaueren Blick auf das Projekt zu haben wurde ein Geschäftsplan erstellt.

Da es an das nationale Stromnetz angeschlossen ist, kann es 100 % der Leistung in jedem

Jahr absetzen. Arbeitsverfahren , Reparaturen, Schulungen, Instandhaltung, Abrechnungen

und das Sammeln von Geld sind weitere Gesichtspunkte, unter denen das Projekt

beleuchtet wird. Ein Finanzplan führt zu einem noch detaillierteren Bild von einem starken

und stabilen Unternehmen.

Einhergehend mit der Entwicklung des Energieprojekts, muss auch das gesamte Umfeld

mobilisiert werden, um den sozio-ökonomischen Nutzen der Energiekraft-Anlage zu

maximieren (i) und das Risiko zu minimieren (ii). Es bedarf des aktiven und positiven

Einsatzes der Beteiligten und Begünstigten für dieses Projekt hinsichtlich der Werbung,

der Vorbereitung und der Durchführung.

Die sozialen Auswirkungen des Projekts sind allgemein positiv. Das Projekt soll den

Lebensstandard der privaten Haushalte verbessern und eine Schlüsselkomponente beim

Antreiben der lokalen ökonomischen Entwicklung sein. Den Menschen wird ein besserer

xv

Service mit niedrigeren Kosten geboten, wenn man sie mit der derzeit üblichen

Energieversorgungen in der Kommune vergleicht. Des weiteren müssen die Betroffenen

nicht mindestens sieben Jahre warten, um an das nationale Stromnetz angeschlossen zu

werden. Abschließend lässt sich feststellen, dass das

Entwicklungsmodell von Wasserkraft mit Anschluss ans Stromnetz für Giap Trung

umsetzbar und zukunftsträchtig ist. Man kann davon ausgehen, dass es auf weitere Teile

Vietnams ausgedehnt wird. Es wird empfohlen, dass die Regierung Vietnams, einer der

Mitwirkenden und gleichzeitig Markt-Ermöglicher, eine aktivere Rolle einnimmt, um die

Interessenlagen unter den Beteiligten auszubalancieren und die Entwicklung des Modells

mit dem notwendigen Ausmaß zu unterstützen.

1

1 Background

Vietnam is well endowed with hydropower resources, particularly in the hilly and

mountainous areas in the northwest of the country. Small hydropower is experienced the

cheapest and most reliable renewable energy sources, currently available in Vietnam that

likely will form a major part of the Renewable Energy Component. The technical potential

for small-scale hydro generation (under 10 MW per site) is estimated about 800 -1400MW,

of which 400-600 MW could be connected to the national grid. However only 10% of the

potential has been exploited so far3.

Renewable could play a significant role in electricity generating to provide to rural areas

aiming to improve their standard of living and encourage income generating activities. One

part of the ambitious Rural Electrification Program, which is carried out by Government of

Vietnam (GOV) and World Bank (WB) aiming to electrify 90% of ten million households

living in rural area by 2010, is to develop grid connected small power plants based on

Renewable Energy, especially on small and mini hydropower. These hydropower plants will

provide electricity at high quality to local residents who are not being able to access to

electricity or are supplied by diesel generation with high cost, and feed supplemental

electricity to the national grid.

GOV expects these projects, based on commercial manner, will attract participation of non-

utility investors such as local authorities, local enterprises or private investors. By promoting

the involving of non-utility investor in these small grid connected hydropower projects,

GOV aims (i) To exploit the renewable energy potential to provide electricity to local

household at relatively low cost, and to supplement grid supply, (ii) To reduce financial

burden to state budget for rural electrification and extension of generation capacity4, (iii) To

involve private sector in promoting renewable energy development in Vietnam, and (iv) to

replace the existing model, which has bad reputation in developing small and mini

hydropower in the past due to not clear ownership, poor operation and maintenance, and

high cost resulting from very low demand in rural areas.

3 Bogach, 2000, p. 7

4 Annually EVN needs about US$ 2 billion investment capital during period 2002-2010. Sources www.vnexpress.net. Printed on 15.11.2002

2

In order to realize the target, GOV with great effort, is going to approve a new Law of

Electricity by the end of 2003 that will generate a solid legal ground and institutional issues

for such kind of investment. Particularly, a Standard Power Purchasing Agreement (SPPA)

for Small Power Producers (SPPs), which deals with purchase tariff, term of agreement and

other related issues, will be published and applied for all SPPs. Preferential policy on tax,

capital mobilization, etc is also expected to be touched upon.

In fact such kind of the projects has been received interest of quite a lot of private investors.

Participation of private sector will create a new form of ownership and investment to

Vietnam’s power sector that concerns investors, local residents and GOV/Electricity of

Vietnam (EVN). Attractiveness of the projects to investors is scaled by gained profit, while

for the local resident is impacts of the project to their life and GOV/EVN is to exploit

renewable energy potential available and using efficiently scarce national resources.

Sustainability of a development model is archived only when having feasible project and

satisfying interests of its participants.

In that context, the study is carried out to (i) evaluate the feasibility and sustainability of the

new development model in meaning of legal and institutional, social, and economic and

financial aspects, and (ii) to analyze role of the participants to assure sustainable

development of the model. Furthermore, the needed measure to promote development and

minimize the risk to the investment also discussed and recommended in detail.

To support the study, a potential hydropower site located at Giap Trung Commune, Bac Me

district, North province of Ha Giang was selected as a case study. Giap Trung is one of the

poorest communes in Ha Giang province that listed among communes being connected to

national grid after 20105. It is supposed that a mini hydropower scheme with 244 kW

installed capacity will be constructed by private investor aiming to electrify the commune

and feed supplementary electricity to national grid, 7.5 km distance. Electrifying 564

households in the commune will help to improve their living condition and promote

economic development in the area.

5 According to the Master Plan Study in Rural Electrification, IoE, 1999,

3

2 Objective

The objective of the study is to evaluate feasibility and sustainability of Giap Trung grid

connected hydropower scheme, which is supposed to be developed by private investor to

electrify the commune in order to improve their standard of living and encourage income-

generating activities and to feed supplementary electricity to national grid. In addition the

role of participants, possibility to extend the model in Vietnam and necessary measures to

promote the development model will be studied and recommended as well.

More specifically, the objectives of the study as follows:

(i) To optimize exploitation of the available hydropower potential in term of

economic cost for electrification and economic benefit of investment

(ii) To analyze legal and institutional issues related to Independent Power Producers

(IPPs) in Vietnam, these impact and development.

(iii) To set up a management model for the hydropower project

(iv) Economic and financial appraisal under present situation in Vietnam.

(v) To set up primary business plant for the project aiming has closer sight to

operation and management of the project.

(vi) To anticipate possible social impact of the project to Giap Trung commune, and

(vii) Lesson learned and possibility to apply the model in Vietnam.

3 Method and Methodology

3.1 Field research

Field research had begun officially from October 01st 2002 to December 31st 2002 in Hanoi

and other provinces in Vietnam. A number of field trips have been carried as follows:

(i) One week-visiting un-electrified commune of Giap Trung in Ha Giang province

on the last week of October 2002. Carrying questionnaire and key interview with

community mobilization experts, and site investigation with foreign experts

(ii) Visiting un-electrified commune of Bat Mot in Thanh Hoa province in

November, 2002

4

(iii) Visiting un-electrified commune of Thong Thu in Nghe An province in

November, 2002

(iv) Visiting 3 MW grid connected small hydropower of Yajun Ha, which went in to

commercial operation since 1999 in Gia Lai province

Desk studying and data collection have been carried out in the following organizations:

(i) Power Engineering Consulting Company 1, Hanoi

(ii) Electricity of Vietnam, Hanoi

(iii) Institute of Energy, Hanoi

(iv) Ministry of industry, Hanoi

(v) World bank office in Hanoi

(vi) Department of Industry of Ha Giang Province

(vii) ENTEC AG office in Hanoi

(viii) Workshop on Small Power Project, Hanoi6

3.2 Method and methodology

To conduct the study the following methods and methodology have been used:

(i) Data collection7

(ii) Household questionnaire survey: Household questionnaire was performed in

cooperation with social expert of MOI for 33 households in Giap Trung

commune. The objective of the questionnaire survey is to collect baseline data for

RARE program, which mainly focus on mini hydropower development. The

6 The workshop was organized by MOI & World bank Vietnam with participation of MOI, WB, EVN, Investors and other interests. The workshop is conducted by Steven Ferrey, the Professor of Law at Boston, USA. The main objective of the workshop are (i) Examine the role PPA, (ii) Examine the concept of Avoided Cost in SPP transaction, (iii) To share how other nations designed and implemented PPAs and avoided cost, (iv) To examine opportunities now to use additional available international funds for renewable SPP development in Vietnam, and (v) To share the idea what process and next step would best allow SPP development in Vietnam

7 See Field Research

5

format of the questionnaire for general data is designed by social expert, and for

electricity use is designed by myself.

(iii) Key interview has been done to leaders of “Giap Trung” local Peoples

Committee (a) to have a general picture of the whole commune;(b) to have data

of using energy for productive and public purpose, and; (c) to find out the

development plan of the commune for the coming time. The questionnaire format

was built up by International social expert in cooperation with MOI, PECC1

experts. Several informal “ Key informant interview” have also been done to

experts from IPPs department of MOI, EVN’s department of Business and Rural

Electrification, EVN’s department of Law and Regulation, non-utility investors

and consultants.

(iv) “Appliance saturated method” is used to forecast load demand.

(v) Excel spread sheet is widely used for (1) household data processing, (2)

hydropower potential assessment, (3) Selection of the optimum development

option of the hydro scheme, (4) Economic and financial analysis, and (5)

Financial Plan for Power Enterprise.

(vi) Economic and financial appraisal

6

Figure 3.1: Location map of Giap Trung commune

7

4 Socio - economic situation of Giap Trung Commune

Giap Trung commune is situated 10 km from the district center on a dirty road in poor

condition (passable by four-wheeled vehicle only in the dry season). The national grid runs

along the district road 6.5 km to the south of Giap Trung. The commune is made up

primarily of households relocated here from areas further north (due to the war with China

1979 -1980).

Figure 4.1: Village map of Giap Trung

Giap Trung is a multi-ethnic commune that comprises 5 ethnic minority groups. According

to Ha Giang local authorities, Giap trung is one of the poorest communes in the area that is

given priority to invest on infrastructures such as school, road and electricity in order to

improve livelihood of local people. The total population of the commune is 4490 persons, in

590 households. The Dao are the largest ethnic group (76%) of the population. Tay: 10%;

H’mong: 14%; Kinh: 1%; Hoa: 0.3%.

8

Figure 4.2: Distribution of Ethnic group

Dao75%

Tay10%

H'mong14%

Kinh1%

Hoa0%

The Dao and Tay in Giap Trung commune are quite assimilated with the way of life in the

lowlands, although Kinh language is not widely used and traditional customs continue to be

respected. Despite the distance from village to village is far, people have close relations. It is

quite common to find three generations living in the same house e.g. Grandparent, Parent

and children. The population is relatively young with 52% of people under 18 and the

remaining is 48%.

The literacy rate is reported quite high at 75% and 90% can communicate Kinh language.

Almost children go to school in the commune center or located in villages. However, very

few of them could continue to high school.

The eleven villages are closely linked through both economic relations and marriage ties.

Families and neighbors assist each other during times of hardship, such as lending food on a

no-interest basis. Traditions of communal work are also strong and continue to be

maintained in the villages. Villagers often work together to repair inter-village roads and

pathways, and help each other or exchange labor in building houses.

In all villages of Giap Trung, the role of the village patriarch is not very strong, whereas the

role of the village heads is very apparent. Villagers tend believe in the heads of their villages

and to follow the decision of these leaders. Most village heads are young, have been well

educated compared to the average level in the village or commune (they are also exclusively

male in Giap Trung, not unlike other rural areas of Vietnam). They speak fluently Kinh

language and are officially elected by the villagers. All information to be conveyed between

commune authorities and villagers is transmitted through village heads.

9

All of the villages have branches of the three basic mass organizations of Vietnam: the Party,

Youth Union and Women’s Union. Unlike some other communes where the Women’s

Union is quite strong and influential, the Women’s Union in Giap Trung seems not as active

as the Youth Union branch. The village officials maintain a good and close relationship with

the village heads and the mass organizations, especially the Party. In the administrative task,

the Party plays the most significant role and dominates the operation of the Commune

People’s Committee. The political power of the agricultural co-operatives has been

diminished in the last decade. However, they still play a significant role in reporting the

crop, insect situation and selling agricultural inputs (fertilizer, seeds, etc.).

Similar to other mountainous communes, Giap Trung 's infrastructure is not developed. The

road connecting to the district is in poor condition that cannot access by vehicle in rainy

season. Inter-village roads are earth road and there are some sections cannot access by car.

A primary school locates in Khau Nhoa village with a number of classrooms distributed in

other villages. Kindergartens are seen in several villages. Both school and kindergartens

were constructed by governmental budget. Besides, a commune clinic and commune office

locates also in Khau Nhoa village that is considered as commune center. The market, opens

two times a month in the commune center, does not attract people from surrounding

communes, but only serves local needs. People from all twelve villages come to exchange

basic produce here. There are some small shops in the commune center selling basic general

goods such as fish sauce, batteries, notebooks etc.

The economic activities of the commune focus mainly on agriculture (rice and corn

production), forest product exploitation, cattle breeding and trade. Almost of households

(97%) have agricultural land and have been allocated forest area under protection contracts

in accordance with State regulations. According to local authorities, 25 households are

involved in trade, and 40 households run shops (30 of whom are from outside the commune).

All other households are involved in agriculture and forestry. Khau Nhoa, Na Bo, and Na

Vieng villages have conditions to plant paddy rice in the river valleys. In the other villages

people plant at upland agriculture and collect forest products. Livestock rising is not as

developed as it has been in the past, due to widespread disease in the region.

10

Figure 4.3: Paddy rice in Giap Trung

Source: Oliver, Entec AG, 2002.

Average agricultural land area per capita varies greatly from village to village. It is highest in

Khau Nhoa (260 m2 per capita), and lowest in Lung Cao, Khuoi Phung and Lung Nhoa

(about 80 m2 per capita ). Income from agriculture in the four more remote villages is lower

than in the centrally located villages due to less pretty land and water shortages in those

villages. Average rice productivity in the commune for 2001 was 190kg/360m28.

Several households in the commune are traders, mostly trading in household items and some

running food services. Most of them locate in Khau Nhoa and Na Vieng village. Households

in trade have incomes significantly higher than those purely dependent on agriculture.

Figure 4.4: Proportion of household by well-ranking

30%

46%

24%

Poor Average better-off

8 360m2 is one sau, a standard land measurement.

11

Average income per household in the commune in 2001 was 7,740,000 VND. The

distribution of income is significantly uneven (see the figure 4.4) ranging from 840000 to

19000000 VND. The ratio of poor households is still high, accounting for about one third or

178 households9. Among the poor households, 85 households faced food shortage at least 2

months/year. The number of average income households is 268 households, accounting for

45.5% of the total number of households. The number of better-off households is 143,

equivalent to 24.2%. Households considered to be “better-off” are mostly concentrated in

Khau Nhoa, Na Bo and Na Vieng villages.

Figure 4.5: Household Income Distribution

0%

10%

20%

30%

40%

50%

Prop

ortio

n (%

)

<1 1 to 5 5 to 10 10 to 15 >15

Household Income (mil. VND)

Informants gave several reasons for why some households are more successful

economically. Among the better-off are households of commune officials, who have stable

incomes and allowances. Other better-off households are skilled in animal husbandry,

especially ox husbandry, which is a good income source in the area. Other households are

better-off due to trading and some have high income because of hard work and good

knowledge of cultivation, resulting in higher productivity. Living standards vary from

village to village. This is attributed to more favorable conditions for agriculture in some

villages, and better access to trade and commercial activities. Commune leaders ranked the

living standard of the five centrally located villages in descending order as follows: Khau

9 The classification follows the national standard. “poor” household are those have monthly income less than 1,000000 VND, “average” household have income between 1,000,000 – 5,000,000 and “better-off” have income more than 10,000,000 VND.

12

Nhoa, Na Vien, Na Bo, Than Khien, Na Den, Phia Booc, Lung Ngoa, Na Pong, Khuoi

Phung, Lung Cao.

Three wealthy groups, a group of women in Phong village, a group of residents in Khau

Nhoa village, and commune leaders were asked to rank development priorities. While there

were differences in the results of their rankings, all ranked an improved access road to the

commune and electricity among the top three development priorities.

Table 4.1: Ranking of Development Priorities10

Local Authority

Residents in commune center (Can village) .

Women’s group

Income generation 3 2

Water 4 4

Health 4 (‘better clinic’)

Education 5 (‘better school’)

Access Road 1 3 1

Electricity 2 1 2

Irrigation 5 5 3

Existing energy generation facilities

The most common energy sources in Giap Trung are Pico-hydro, kerosene, wood, candles,

batteries and diesel motors. Diesel engines are used for rice husking /polishing, and wood

processing.

Pico hydro use is relatively high with 72% of total households (402 households) either own

or share the use of a Pico hydro generator. Pico is used primarily for lighting, black and

white televisions, electric fans, radios and cassette players. Households in the villages

surveyed reported that they run standard light bulbs as well as fluorescent tubes for lighting

powered by their Pico generators. Complaints given by local people about Pico hydro energy

were mainly to their quality. The quality of the machines is low and therefore they do not

have a long life span (local people in Giap Trung did not expect their Pico generators to last

10 The scale of ranking is from 1 to 5. 1 is considered the highest priority and 5 is lowest priority

13

more than 4 years) and the machines require constant maintenance. A common problem in

Giap Trung was the frequent theft of Pico hydro generators in the night.

Figure 4.6: Pico using in Giap Trung

Source: Oliver, Entec AG, 2002.

Purchase price for Pico units can vary greatly. People reported buying second hand units for

as little as 40,000 VND, while new units can cost up to 1,200,000 VND. Average cost is

about 350,000 VND per unit. Everyone interviewed said they installed the units by

themselves. Almost of households say they keep their Pico units running 24 hours a day

(This means that they keep the unit in the flow of the stream and not necessarily imply that

they are drawing power off of the unit for the full 24 hours.). Monthly maintenance expenses

are from 10,000 VND to 15,000 VND per month.

Besides Pico, kerosene is one of the main sources of energy for lighting in Giap Trung. In

the questionnaire survey, 97% of households surveyed reported using kerosene for lighting.

Many of these households use kerosene lamps in addition (or as a backup) for Pico hydro.

On average, households reported using about 1.5 lit/month, cost 12000 VND per month.

There is sometimes a shortage of kerosene in the commune (when road conditions are bad

and it cannot be transported). At those times, household use candles for lighting.

Kerosene is supplied to the commune through two sources. One is the state supply system

run by the General Corporation for Mountainous Areas Development; the other is private

supply through private suppliers. State run stations sell kerosene at 4500 VND/liter (they

have state subsidy for transportation). The private stations sell at a higher price, usually

14

around 5000 VND/liter, although this may go up to 5500 VND/liter at times when no

kerosene is available through the state supply. State run stations tend to close earlier than

private suppliers; therefore private businesses rely on custom from households running short

of kerosene after hours and at times when state supply runs dry.

Wood is mainly used for cooking and heating. 100% of households are using wood for

cooking. Fires tend to burn throughout the day and night, especially in winter if people are at

home and are stoked and rekindled when needed to prepare meals or prepare feed for some

animals. Alcohol is also distilled over wood fires.

One household, on average, uses 380 kg wood per month. They collect firewood freely in

the surrounding hills, and purchase of firewood is unknown. For interviewed household,

wood collecting is completely done by women. The women spend 1.8 hours in average for

wood collecting.

Figure 4.7: Time for wood collecting of women

79% of household in the commune use dry cell batteries regularly. Dry cell batteries are

used primarily for running cassette players, radios, and flashlights. On average, each

household in the commune uses about 4 batteries per month, spending an average of 5,000

VND for batteries every month. Flashlights are used outside of the house, so batteries are a

current source of energy that cannot be entirely replaced by hydropower or other sources of

electricity within the home. Dry cell batteries may be purchased at the small private shops

with cost of 2,500 VND/pair.

There are 14 diesel motors, which are used to run machines for rice husking and polishing

and two wood processing stations running in the commune.

0%

10%

20%

30%

40%

50%

60%

Prop

ortio

n (%

)

0.5 1 1.5 2 3 4

Hours

15

Other energy source is candle. Candles are used mostly by teachers (in villages), for lighting

at night after school hours, or in households when there is a shortage of kerosene.

Current energy use and household well-being

There were no considerable distinctions in the ways of using energy among different well-

being. Use of Pico hydro generators is only slightly lower for poor households (60%) than

for households ranked average (80%) or better off (75%)11. A number of households in any

of these categories are sharing Pico with other households.

Kerosene was much less widely used by richer households (22%) than by average (95%) or

poorer households (89%). One possible explanation is that better off households may be able

to afford more modern forms of lighting (such as neon strips, or rechargeable ‘flash’ lamps)

that they can recharge or use Pico systems, rather than using simple kerosene lamps for

lighting. Differences in the use of wood for fuel could be neglect among wealth ranking

groups.

As seen from the communes, there is little possibility to change from wood to electricity for

cooking and heating It may be possible to convince some rich households to use electric

kettles or rice cookers but this still need actively campaign. However, there is a high

possibility to convert energy demand for milling/husking and wood processing to electricity

and the number of televisions is also likely to increase.

It can be concluded that electricity is not new to Giap Trung, many households have owned

or share Pico hydro systems for several years already. The anticipated social impact of the

project in the commune is mainly in terms of what kinds of advantages may be offered to

local people through using power from mini hydro power rather than their current sources of

energy.

5 Load Demand Forecast

Similar to other rural areas, electricity demand for Giap Trung commune can be divided in

three groups by the purpose of electricity using (i) domestic use (by households), (ii) public

11 A number of better-off household involving in trading and living far away from stream therefore percentage

of those using Pico is lower than that figure of average group.

16

and service use, and (iii) productive use. Load demand for the whole commune is total

demand of these groups.

Domestic use

Electricity demand for domestic use purpose is forecasted based on information collected

from field surveys12 and actual situation of using electricity in Vietnamese rural areas. It is

clear that for such rural area like Giap Trung commune the demand for lighting accounts for

the largest part of household’s electricity consumption, following by entertainment and

others. The peak load occurs at from 19 to 20 o'clock resulting from electricity demand for

lighting.

To estimate domestic electricity demand a "typical household's electricity consumption

profile" for the commune is identified. The profile is not a profile of a household in reality,

but is an assumed household profile, which expresses electricity-using characteristic of all

households in average. Followings are basics to identify the typical profile:

(i) It is assumed that after electrified, all substitutable energy sources for domestic

use purpose will be replaced by electricity provided from hydropower scheme,

that are electricity comes from Pico, kerosene, dry cell battery for radio and

cassette players.

(ii) Each household has from 1 to 3 lamps for lighting with assumption there is a

correlation between proportion of household having 2 or 3 lamps and medium

and rich households13

(iii) Penetration rates of other electrical appliances such as TV, radio, etc come from

survey data result.

(iv) Using time of the appliances gained from survey data and taking experience of

similar electrified villages in Vietnam in consideration.

The typical profile is identified with total power of 150.3 W and monthly energy

consumption of 17.8 kWh. The typical profile is presented in table 5.1

12 Field survey includes (i) household survey; (ii) productive use survey (iii) electricity use. See appendix 1 and 2 for more detail.

13 See chapter 4 "Socio-economic situation of Giap Trung commune"

17

There will be 546 households connected to the mini hydropower scheme in Giap Trung

commune. Correspondingly, monthly electricity demand for domestic use is 9734 kWh

equivalent to 116806 kWh/year.

Table 5.1: Typical household's electricity consumption profile

Appliance Power Penetrate rate

Power Daily using

Monthly consumption

(Watts) Unit (%) (Watts) (hour) (kWh)

Bulb 1 60 1 100% 60.0 4.5 8.1

Bulb 2 40 1 60% 24.0 4.0 2.9

Fluorescent lamps 40 1 30% 12.0 4.0 1.4

Radio/Cassette 15 1 70% 10.5 3.0 0.9

TV 75 1 40% 30.0 3.5 3.2

Video Recorder 35 1 5% 1.8 1.0 0.1

Rice cooker 1000 1 0% 0.0 1.0 0.0

Refrigerator 85 1 0% 0.0 6.0 0.0

Fans 40 1 30% 12.0 3.5 1.3

Sum 150.3

Monthly consumption 17.8

Public and service uses

Group of consumers using electricity for public/service use consists of the district's general

heath clinic, the Giap Trung secondary and primary schools, the Commune Office, shops

and services. Total energy demand for public/service use is estimated 795 kWh/month,

equivalent to 9538 kWh/year. The power and yearly energy consumption of the customer

group are shown on table 5.2. Detail calculation is on appendix 2.

Table 5.2: Electricity demand for Public/ services use

Customer Power

(W)

Annual consumption

(kWh)

Consumption time

District's heath clinic 2585 3329 Round day

Giap Trung school 2340 2967 Round day

Commune Office 1410 1994 Round day

Shops and Services 840 1248 Round day

Sum 7175 9538

18

Productive use

Electricity demand for productive use in Giap Trung commune is mainly for rice husker and

wood processing machines currently powered by diesel engine, which potentially could be

replaced by electrical motors. Most of diesel engines are old, low efficiency with capacity of

12 kW. Technically, the engine can be replaced by electrical engine with capacity of 7.5 kW

that requires a large investment cost of 1.5 to 3 million VND. Electricity demand for

productive use considerably depends on number of consumers willing to convert to electrical

motor. Among 14 rice huskers, two commits to convert to electricity, one say no and the

remains do not give final decision yet. Therefore, it is expected that at the beginning 2 rice

huskers will convert to electrical engine with total capacity of 15 kW (7.5 kW x 2).

According to field survey, annually diesel consumption for husking and milling rice in the

whole commune is 4620 liter. Assume that the efficiency of diesel engine and electrical

engine are 20% and 75% respectively, the total electricity demand for rice husking is

estimated at 12409 kWh/year if all amount of rice is husked by the electrical engines.

However, even though electric engines offer lower husking fee, it is expected that only 40%

of Giap Trung’s demand of rice husking will be done by electrical engines due to remoteness

and habit that accounts for 4964 kWh/year.

At present two wood processing machines are working in Giap Trung commune. The

visiting to two processors during the filed trip observed they were quite busy at that time.

The owners are very interested in shifting from diesel motor to electrical motor and aware of

benefit from shifting as well. However they still concerned about the electricity quality that

might affect to their business. It is expected that two wood processor will convert from using

diesel to electricity when the commune electrified. Electricity consumption and power of the

processors are presented in table 5.3. The figure of 37084 kWh/year is calculated for

productive use demand.

Table 5.3: Power demand for wood processing

Appliance Power

(W)

Unit

(Set)

Daily using

(Hour)

Annual consumption

(kWh)

Power-saw 5000 5 2.5 22812.5

Planer 1500 5 3 8213

Bulb 60 10 5 1095

Sum 32120

19

Total load demand at first year of electrified for Giap Trung commune is, therefore,

forecasted as follows:

- Electrical energy demand: 163428 kWh/year

- The peak load: 62.9 kW

- Load factor: 29.6%

Figure 5.1: Electricity demand for Giap Trung commune

Daily load curve

The daily load curve of the commune is set up based on following parameters:

(i) Typical household's electricity consumption profile

(ii) Electricity using characteristic of households

(iii) Electrical appliance and electricity using characteristic of public/services use and

productive use with assumption that power demand of productive use will occur

in daytime only.

Domestic use71%

Public and services use

6%

Productive use20%

20

Figure 5.2: Daily load curve for the commune

Load Demand Growth

On the long term, the growth rate of the electricity demand primarily depends on population

growth rate and economic development. During the first years after electrification, however,

a higher demand growth is to be expected, as more new electrical appliances will be

purchased. Experience in electrified villages in Vietnam like Na Bo and Na Tra shows that

the electricity demand grows annually by 1% to 4%14.

Based on the above considerations, an average growth rate of the electricity demand of 2.5%

for the first three years, and an average of 1.5% for the following years is assumed for the

computation of the load forecast in the Giap Trung commune. The electricity demand will

thus increase from 163428 kWh to 223334 kWh after 20 years

The average growth rate of the peak load is estimated at 1.5% on average for the next 20

years. The peak load will thus gradually increase over the next 20 years from 62.9 kW to

76.8 kW.

14 PECC1, EVN

0

10

20

30

40

50

60

70

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Time

pow

er (k

W)

Domestic use Public and services Productive use

21

Figure 5.3: Energy demand projection

0

50

100

150

200

250

300

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

Elec

trici

ty d

eman

d (k

Wh/

a)

Domestic use Public and service use Productive use

Figure 5.4: Peak load projection

0102030405060708090

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

Peak

load

(kW

)

Similar to other remote rural areas in Vietnam, electricity demand in Giap Trung is very low

compared to average electricity consumption for the whole country. The demand is

characterized by low load factor (29%), one peak load at 19-20 o’clock (that time is also

peak load of Vietnam’s power system) caused primarily by lighting and entertainment. In

additional, scattered resettlement of the households will likely lead to very high cost to

electrify the commune.

22

6 Hydropower potential, scheme components and cost estimation

The proposed mini hydropower plant is located on Nam Nung stream, about 4 km from the

central of Giap Trung commune. At present there is a track which can access to the power

house round year. The topographical condition allows to build a run-off-river scheme which

comprises of a small weir, a 710 m length canal to create a generate head of about 65 m.

Local material for building the plant is found very near the site with quite good quality that

will help to reduce the cost of the power plant.

6.1 Hydropower potential

Hydrological assessment15

The mini hydropower scheme will exploit the hydropower potential of the Nam Nung

stream. The catchment area at the intake is 28.7 km2 stretching from Northeast to Southwest

over a length of 7.5 km at a mean elevation of 740 m a.s.l. The area is mainly covered with

forest, some rice paddies and widely spread settlements with agricultural land use.

Because there is no observed hydrological data for the site is available then average annual

discharge and duration of flow at Giap Trung site was determined by the Tank Model

Program16. This program was developed to estimate and simulate monthly and annual river

discharges. Rainfall data and other characteristics of the catchment area are used in

comparison with data from neighboring rivers to model the flow characteristics of a stream.

Parameters for the Tank Model in the calculation were rainfall data and river flows observed

at the Bao Lac station, which is 10 km from the site for the years from 1963 to 1972

The annual runoff at the proposed site is simulated from the monthly rainfall data, which

was available for the last 38 years. The characteristic figures are shown below:

• Mean annual stream flow: Q0 = 0.967 m3/s

• Mean annual specific discharge: M0 = 33.64 l/s.km2

15 HEC1 (Hydraulic Engineering Construction Company 1, Hanoi, Vietnam) 16 Adopted from the Tank Model of M. Sugawara, developed at the of National Flood Protection Center of Japan in 1956.

23

Figure 6.1: Catchment area of Giap Trung hydropower

Beside that discharge measurement by salt and cross methods was done during the field

research to check the data gained from interpolation. The measurements November 2002

revealed an average flow of 600 l/s seems suitable with interpolation result.

Estimated hydrological data for Giap Trung site, illustrated on the hydrograph and flow

duration curve in figure 6.2. Detail hydrological data see appendix 3.

24

Figure 6.2: Hydrological data for Giap Trung Hydropower

Hydropower potential estimation

The gross head of the hydropower is measured by total station during the field research

resulting in gross head of Giap Trung hydropower is 68 m.

Head loss estimation and turbine technical parameters are done based on the measured gross

head and supposed rated discharge of 0.6 m3/s, penstock internal diameter of 0.45 m. The

results of the calculation are shown on figure 6.3.

Figure 6.3: Head loss and Turbine Efficiency

The hydropower potential available is much more greater than the power demand from Giap

Trung commune. Therefore, the option to construct an off grid hydropower to provide power

to the commune is likely not economical compared to a grid connected hydropower, which is

connected to national grid about 7.5 km distance17. Because the Giap Trung hydropower is

17 See “Optimization of the hydropower scheme”

Hydrograh

0

1

23

4

5

6

0 96 192 288 384

Month

Dis

char

ge (m

3/s)

Flow Duration Curve

0123456

0% 20% 40% 60% 80% 100%

Prequency

Dis

char

ge (m

3/s)

Head loss curve(penstock diameter of 0.45 m)

02

46

810

12

0 0.2 0.4 0.6 0.8

Discharge (m3/s)

Hea

d lo

ss (m

)

Turbine efiiciency(Rated dischrge of 0. 6m 3/s)

0

0.2

0.4

0.6

0.8

1

0 0.2 0.4 0.6 0.8

Discharge (m3/s)

Turb

ine

effic

ienc

y (%

)

25

supposed to connect to national grid then there is no limitation in the demand for the project.

The project, therefore, will be developed at large level to benefit from economic of scale.

From that point of view, install capacity of 244 kW is selected for the mini hydropower

resulting in annual output of 1451092 kWh, firm energy 502458 kWh (frequency of 90%).

Main hydrology parameters of the hydropower are presented in table 6.1. Duration curve of

the hydropower plant see figure 6.4. Detail calculation see appendix 3.

Table 6.1: Main hydrology parameters

Items Unit Value

High water level m 325.00

Fore bay elevation m 323.00

Rated discharge m3/s 0.60

Rated head m 63.71

Firm Capacity kW 57.5

Firm energy kWh 503574

Installed capacity kW 244.1

Annual output kWh 1452354

- Wet season kWh 522755

- Dry season kWh 929599

Plant factor % 68%

Figure 6.4: Power duration curve

0

50

100

150

200

250

300

0% 20% 40% 60% 80% 100%

Pow

er (k

W)

26

6.2 Hydropower components

6.2.1 Civil work

Civil work comprises of an over-spill weir, intake, head race canal, fore bay, penstock and

power house.

A stone masonry over-spill weir will be constructed to accumulate water for intake with the

length of over-spill section of 15 m. The weir have dimension length x height = 20 (m) x

2(m). The width of the weir crest is 0.8, while the bottom width is 3 m. A cut-off is designed

under weir to prevent seepage and a downstream yard to prevent erosion in downstream.

The intake structures comprise of the weir body, a flushing opening, an intake orifice and a

side wall out of stone masonry on the right river bank, preventing water from bypassing the

weir. The intake is designed as a side intake. During normal plant operation the slide gate at

the flushing canal (width: 1.2m, height: 2.0m) is closed, whereas the intake orifice (0.7m x

1.0m) is opened. During flood events with heavy bed load transport and voluminous floating

debris the intake orifice can be closed and the flushing canal be opened.

The settling basin (or sand trap) made of stone masonry and covered with mortar is located

behind the water intake and has the following dimensions: width = 2.0m, length = 10.0m,

and depth = 1.7m. A discharging outlet (width 0.5m, height 1.0m) is located at the end of the

basin

The headrace structure begins with the outlet at the settling basin and ends at the fore bay.

The total length of the headrace together is 710m. The headrace is designed as an open canal

made out of stone masonry and leading along the right riverside. The standard cross-section

of the headrace canal is 1.0m wide and 1.2m high. The slope of the canal is 0.1%, resulting

in an average water depth of 0.9m for the design flow of the plant.

The fore bay forms the transition from the headrace to the penstock pipe and is built out of

stone masonry. The fore bay has the following dimensions: width 2.7m, length 10.0m, depth

2.0m, and a 5m long transition part. A trash rack prevents gravel and debris from entering

the penstock. The inlet to the penstock can be closed with a sliding gate (width 0.80m, height

0.8m). The fore bay can be emptied through an opening at the bottom of the basin, which

can be closed by a sliding gate (width 0.4m; height 1.3m).

A spillway conveys any water discharged from the fore bay safely away from the basin.

From the overspill section of the fore bay the water is diverted through an open channel

27

directly down to the river. The spillway has a length of approximately 50m and is lined with

stone masonry.

The total length of the penstock is 79m. The penstock consists of rolled welded steel pipes

with an internal diameter of 0.45m. The flanged pipes are welded on site. There is one

expansion joint and one butterfly valve at the powerhouse. The penstock is supported by one

anchor block out of reinforced concrete, located behind the powerhouse, and 10 saddles out

of stone masonry (approximately every 8m).

The powerhouse is located at the right riverbank of the river and has a reinforced concrete

base with a ground size of 10 x 15m and brick walls. The roof is covered with corrugated

zincalum sheets.

The total length of the tailrace structure conveying the water from the powerhouse back into

the river is approximately 30m. The tailrace is made of stone masonry and has a trapezoid

cross-section with a bottom width of 1.0m, a top width of 2.0m, and a depth of 1.0m.

Figure 6.5: Longitudinal cross section of Giap Trung hydropower

6.2.2 Electrical and mechanical equipment

Regarding the hydraulic data of the Giap Trung hydropower site (net head: 65 m, design

flow: 600 l/s), basically a Cross flow turbine or a Francis turbine is suitable. Whereas today

cross-flow turbines are successfully being manufactured in developing countries (e.g.

Indonesia, Nepal) having higher efficiency quality and longer lifetime expectancy.

Furthermore good quality Francis turbines need to be imported from industrialized countries

at considerably higher cost. Therefore, cross-flow turbine is selected.

Weir

Intake

Headrace

Fore bay

Penstock

Powerhouse

Tailrace

28

It is proposed to use an internal pole three phase synchronous generator with integrated

exciter machine in brushless design, self-regulated, internally ventilated squirrel-cage rotor,

with roller bearings, including relubricating device and grease regulation.

Either a digital turbine controller or an electro-hydraulic governor is proposed to use. This

control systems allow to regulate the speed of the turbine and generator and thus to keep the

frequency of the electricity at a constant value of 50 Hz.

6.2.3 Transmission and Distribution System

To connect the mini hydropower to the local households and national grid a transmission and

distribution system consisting of medium voltage (MV) 35 kV lines, low voltage (LV) 0.4

kV backbones and low voltage 220 V household connections will be set up. Location

diagram of mini hydropower and transmission/distribution are provided in figure 6.6.

Transformer at Powerhouse (step-up): A three phase 320kVA step-up transformer is

installed at the powerhouse to step up voltage from 0.4 kV to 35 kV.

35 kV Transmission Line to the National grid: A three phase 35kV transmission line will be

installed from the power house to the EVN's 10000 kVA substation in Bac Me district

center. The length of the lines is about 6.5 km

35 kV Transmission line to the commune: A three phase 35kV transmission line, 14.2 km

length, from the mentioned transmission line to villages will be built to connect the connect

the commune to the power house.

Transformers in Villages (step-down): Four 3-phase 25 kVA step-down transformers will be

used for villages to reduce power supply to 0.4 kV.

0.4 kV Distribution Line (Distribution Backbone):0.4 kV distribution lines with AC25

conductors will be set up with round steel poles to distribute the electricity within the village

(13.2 km).

220 V Household Connections: 220 V low voltage, single phase distribution lines with AC15

conductors will be used for the 546 household connections, whereby the total length of this

distribution network is estimated at 20.5 km.

The length of the lines is calculated base on the topographical data collected by GMS done

by PECC1 staffs.

29

Figure 6.6: Location diagram of mini hydropower and transmission/distribution

6.3 Cost estimation

Cost estimation is done based on the primary design for the mini hydropower scheme. Unit

cost price comes from Vietnam regulation on cost estimation18 and experience of PECC1

experts on some similar project in the region19. The investment cost of VND10, 006.5

million, equivalent to US$649770 is calculate for Giap Trung hydropower scheme. With the

unit cost of 1322 US$/kW and 264 USD/kWh, the hydropower is ranked at average level of

small and mini hydropower in Vietnam. The comparison is shown on figure 6.7 (unit cost of

other mini hydropower is took from Vietnam Renewable Energy Action Plant20 at the price

of the year 1999). To support for calculation of economic electrification cost and allocation

of the investment cost to beneficiaries, the project’s investment cost is divided into

investment cost for the commune grid and for hydropower plant21. Breakdown of investment

cost shown in table 6.2 and figure 6.7.

18 Construction Publish House, Hanoi, 2000. 19 See appendix 3 for detail. 20 Bogach, 2000, p. 52 21 Investment cost of hydropower comprises of investment cost for hydropower plant and transmission lines to EVN’s substation.

0.8 km

7.5 km

6.8 km

Powerhouse

Commune

National Grid

2.3 km

30

Figure 6.7: Comparison unit cost of small hydropower in Vietnam

0 500 1000 1500 2000 2500 3000

Nam Mou

Dan Sach 1

Na Loi

Giap Trung

Da Dang

Na Loa

Da Cho Mo

Nam He

Dan Sach 2

Pa Khoang

Thac Voi

Sa Deung

USD/kWhUSD/kW

Detail cost estimation of the Giap Trung mini hydropower is illustrated in appendix 3

Table 6.2: Cost estimation

Unit: million VND

No. Item / Specification Value

Summary Whole project Hydropower Commune Grid

A Civil Works 1,813.5 1,813.5 0.0

B Electro-mechanical Equipment 2,025.2 2,025.2 0.0

C Transmission/Distribution Lines 5,039.2 1,265.0 3,774.2

D Land Lease / Compensation Payments 15.0 15.0 0.0

E Project Planning, Engineering Design, Site Supervision and Administration 395.0 276.5 118.5

G Contingencies 718.5 503.0 215.6

Total 10,006.5 5,898.2 4,108.3

31

Figure 6.8: Breakdown of Investment Cost

7 Optimization of hydropower scheme

It is expected that private investor will develop Giap Trung hydropower plant aiming to

provide power to Giap Trung commune, and to sell supplementary energy to national grid.

The two purposes (i) Electrification of the commune, and (ii) Investment have different

criteria for the best hydropower scheme. For the former the option which requires the lowest

cost to electrify the commune is the best one but the option, which brings the maximum

turnover is considered the best one from latter’s interest. Therefore, selection of the optimum

option for the hydropower will be considered from two points of view (i) Cost of

electrification for the commune and (ii) Economic benefit of investment.

Economic Electrification Cost comprises of following indicators:

1) Economic Cost of Electricity (VND/kWh) that is the cost of one kWh electricity

provided to the commune (including investment and annual cost).

2) Economic Cost of Electrification for the whole commune means Net Present Value

of total cost paid to electrify the commune including investment cost and annual cost

for the period of 25 years.

3) Economic Cost of Electrification for one household (million VND/household) is

Economic Cost of Electrification for one household in average.

For Economic Benefit of Investment, following indicators are put into consideration:

1) Unit Cost of Electricity (VND/kWh) means production cost of one kWh electricity.

(including the commune's grid)

Civil Works18%

E/M Equipment20%

T&D Lines49%

Engineering5%

Contingencies8%

Land Acquisition

0%

(Excluding the commune's grid)

Civil Works30%

E/M Equipment33%

Engineering6%

T&D Lines21%

Land Acquisition

0%

Contingencies10%

32

2) Economic Net Present Value of the project (million VND), and

3) Internal Rate of Return (%)

7.1 Excel model

To facilitate the selection a excel model is set up to calculate economic indicators. The

model comprises:

(i) Module A – “Cost for electrification” used to calculate Economic Electrification

Cost indicators, and

(ii) Module B – “Investment Benefit” to compute Economic benefit indicators of the

investment.

Module A comprises of 7 worksheets (see figure 7.1)

- “Tariff estimation” worksheet is used to estimate economic tariff for power provided

from national grid to the commune.

- “Input data” worksheet comprises information of load demand of Giap Trung

commune, unit cost and investment cost of all considered options.

- “Grid Connected Hydropower”, “Off Grid Hydropower“, “Connection to National

Grid „, and “Diesel generators“ worksheets are used to calculate Economic

Electrification Cost Indicators for mentioned options.

- “EC result” worksheet to sum up the calculation results

Module B consists of 4 worksheets as follows:

- “Invest Data” worksheet comprises information on load demand of the commune,

economic and financial condition such as discount rate applied, analysis period, etc,

investment and annual cost of considered options.

- “Invest Grid connected” and “Invest Off Grid” worksheets are used to calculate

Economic Investment Indicators for the two options.

- “Invest result” worksheet to sum up the calculation results

33

Figure 7.1: Excel Model Diagram

Module A Module B

Excel Model

EC Result

Input data

Grid Connected

Off grid hydropower

Connect to national grid

Diesel Generators

Tariff Estimation

Invest data

Invest grid connected

Invest off grid

Invest Result

34

7.2 Economic Electrification Cost

The commune might be electrified by (i) exploiting the rich hydropower potential available,

(ii) Connect to national grid, and (iii) install diesel generators. Generation power from wind

or solar radiation is not mentioned due to very high cost compared to said power sources.

Therefore, to select the optimum option to electrify the commune, following options are put

into consideration:

"Grid connected hydropower"

If the option is selected one grid connected hydropower plant will be built at economically

maximum size to supply electricity to the commune and feed power into the national grid.

The project comprises of:

(i) Hydropower plant, 244 kW capacity

(ii) 35kV/0.4 kV 320 KVA transformers located at power house

(iii) MV transmission lines from powerhouse to national grid, 7.5 km length

(iv) The commune grid which includes (i) 14.2 km MV transmission lines from the

main MV lines to villages, (ii) four 35kV/0.4 kV 30 KVA transformers located at

villages, (iii) 13.2 km LV backbone lines, and (iv) connection lines to

households, 20.5 km length.

The investment cost to electrify the commune, however, is considered as the cost for the

commune grid only. That is estimated VND 4, 108.3 million.

In addition, the commune needs to pay for annual cost, which includes: (i) maintenance cost

estimated 1.5% of the investment cost, and (ii) Payment for electricity provided from the

power plant at the tariff supposed at 1200 VND/kWh22.

Cost breakdown of the option is presented in appendix 4.

"Off grid hydropower"

In the option the power plant is constructed to meet the power demand of the commune only.

To meet the demand peak load of 62.9 kW at year of electrification, an 82 kW hydropower

22See 11.1 “Tariff structure”.

35

plant will be built in combination with a mini grid to supply electricity to the commune.

Following components will be constructed for the option:

(v) Hydropower plant, 82 kW capacity

(vi) A 35kV/0.4 kV 110 KVA transformer at powerhouse

(vii) The commune grid which includes (i) 15.7 km MV transmission lines from the

powerhouse to villages, (ii) four 35kV/0.4 kV 30 KVA transformers at villages,

(iii) 13.2 km LV backbone lines, and (iv) connection lines to households, 20.5 km

length

Investment cost is VND 7,239.2 million. Annual cost of 3% and 1.5% of investment cost are

assumed for the O&M cost of hydropower and transmission/distribution, respectively.

Detail cost structure of the option is on appendix 4.

"Connection to the national grid"

The commune is connected to the national grid by MV transmission lines. The cost for

electrification comprise of investment cost for the transmission lines and payment for power

provided from the national grid. The tariff is calculated based on the avoided cost of EVN23.

Electricity consumption during peak load is estimated 50% and 65% in dry season and wet

season respectively and, to simplify, it is assumed no different electricity consumption

between wet and dry season days. Thus the economic tariff of 822 VND/kWh for the power

provided to the commune is estimated 24. The main components of the option are:

(i) 35 kV MV transmission lines connecting national grid to the commune grid with

the length of 6.8 km.

(ii) A 35kV/0.4 kV 110 KVA transformer.

(iii) The commune grid which includes (i) 14.2 km MV transmission lines from the

main MV lines to villages, (ii) Three 35kV/0.4 kV 30 KVA transformers at

23 Avoided cost of EVN is considered the cost EVN can be avoid if they do not have to generate and transmit an additional one unit electricity to customers.

24 Detail calculation is presented in appendix 4.

36

villages, (iii) 13.2 km LV backbone lines, and (iv) connection lines to

households, 20.5 km length.

Total investment cost of VND 5,058.9 million is calculated for the option. The annual O&M

cost of 1.5% of investment cost is assumed.

Detail cost structure of the option is presented in appendix 4.

"Diesel generator"

The power will be provided to the commune by a number of diesel generators installed in

villages with total capacity of 80 kW to meet the peak demand of 62.9 kW. In this case, the

commune does not need to build MV transmission lines due to the generation is located at

center of the villages. The option comprises of:

(i) Diesel generators with total capacity of 80 kW, about 20 kW - 30 kW each

(ii) LV backbone distribution lines within the villages, 13.2 km

(iii) Connection lines to each household, 20.5 km length

At present 25 kW capacity diesel generator costs 6.5 million VND/kW including transport

and installation25 resulting in 520 million VND for investment. O&M cost for the diesel

generator is assumed 5%.

Fuel cost accounts for the heavy proportion of the generation cost. For most diesel generator

in Vietnam the average efficiency observed at 22% then the unit fuel consumption is

calculated of 0.45 liter/kWh. Diesel fuel cost is recorded 5500 VND/liter at the commune

during the field trips.

Breaking down of cost estimation is shown in appendix 4.

Selection

Results of Economic Electrification Cost calculation presented in table 7.1 and figure 7.2

show that “Grid connected hydropower” is the cheapest option with Electrified Cost of VND

6,201.1 million and Electricity Cost of 3,980.4 VND/kWh, follows by options “connection

25 PECC 1

37

to national grid”. Options “Off grid hydropower” and “Diesel generator” are far more

expensive when have electrified costs 1.5 times higher than that of the cheapest option.

Regarding to economic cost for electrification, the two options "Grid connected

hydropower" and “connection to national grid” have similar cost. However the former has

advantage over the latter due to that will exploit the renewable energy potential available, be

environmental friendly, reduce the financial burden for extension generating capacity and

transmission grid. Furthermore this will help to promote participation of private sector in

renewable energy development in Vietnam that is worldwide experienced as the key factor

for the success of renewable energy development. From the arguments, the option "Grid

connected hydropower" is selected for electrifying the commune.

Detail calculation of Economic Electrification Cost is presented in appendix 4.

Table 7.1: Economic Electrification Cost

Option Electrified cost for the commune

Electricity cost

Electrified cost per household

(Million VND) (VND/kWh) (Million VND)

Grid connected hydropower 6,201.1 3,980.4 11.4

Connection to national grid 6,563.1 4,212.8 12.0

Diesel generator 7,109.4 4,563.4 13.0

Off grid hydropower 7,513.8 4,823.1 13.8

38

Figure 7.2: Economic Electrification Cost

7.3 Economic benefit of investment

From investment point of view, there are two development options for the hydropower plant

are put into consideration as follows:

"Grid connected hydropower"

In that option a grid-connected hydropower will be constructed with annual output of

1452354 kWh. The power plant firstly, will provide power to the commune and, secondly,

feed into national grid all surplus electricity. The economic benefit unit of one kWh

electricity provided to the commune is valued equal to the electricity unit cost of the

cheapest option to electrify the commune if no hydropower scheme will be constructed. The

said cheapest option for Giap Trung commune, as calculated in “Economic Electrification

Cost” is connect the commune to national grid with unit cost of 4,212.8 VND/kWh. Tariff

for electricity feeding into national grid is considered as avoided cost of EVN resulting the

average value of 606 VND/kWh26.

"Off grid hydropower"

26 See 11.1 “Tariff structure”

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Grid connectedhydropower

Connection tothe grid

Diesel generator Off gridhydropower

Ele

ctrif

ied

cost

(mil

VN

D)

0

1,000

2,000

3,000

4,000

5,000

6,000

Ele

ctric

ity c

ost (

VN

D/k

Wh)

Electrified cost for the commune Electricity cost

39

In the option, the hydropower will supply power to the commune only. Even though the

power plant has considerably higher energy output than its electricity demand of the

commune but benefit-create electricity is just equal to demand. Economic benefit of

electricity provided to commune values 4,212.8 VND/kWh as mentioned above.

The component of the two options presented in "Economic Electrification Cost". Total

investment cost for the two options are VND 10,006.5 million and VND 6,873.4 million,

respectively.

Input data and detail calculation are presented in appendix 4. Summary results are presented

in table 7.2 and figure 7.3

Table 7.2: Economic Benefit for Investment

Option Net Present Value

Internal Rate of Return

Electricity Cost

(mil VND) (%) (VND/kWh)

Grid connected hydropower 1592.7 12.2% 936.5

Off grid hydropower -950.8 8.0% 4823.1

From investment point of view, only option “grid connected hydropower” is acceptable since

benefit gained from project can cover the cost and generate profit with net present value and

internal rate of return are VND 1,592.7 million and 12.2%, respectively. The option “off

grid” should not be selected due to poor economic indicators (NPV<0 and IRR<10%) and

the unit cost is 5 times higher than that of “grid connected hydropower”. The reason leading

to economic viability of “grid connected hydropower” can be understood that, even though

the option has higher investment cost (due to larger size and additional transmission lines to

national grid) but the connection help to increase the demand for the power plant then

increase benefit-create electricity. The additional benefit coming from increasing benefit-

create energy is greater the addition cost compensating losses and generating benefit.

Therefore, from investment point of view, only the grid-connected hydropower option could

be selected.

40

Figure 7.3: Economic Benefit for investment

7.4 Sum up

Consideration made to select optimum option for developing Giap Trung hydropower from

two points of view shows that option "Grid connected hydropower" is the best option.

Therefore the hydropower with install capacity of 244 kW, connected to national grid is

selected to exploit the hydropower potential available in order to electrify the commune of

Giap Trung and feed power to national grid.

8 Allocation and mobilization of capital investment

8.1 Allocation of investment

Private investor, who is interested in developing Giap Trung mini hydropower, will act as an

Independent Power Producer (IPP) not a retain seller. According to clause 15, chapter III,

Decree 45/2001/ND-CP issued 02.08.2001 by GOV the IPP is responsible for power plant to

generate and transmit power to customer’s grid. The domain of the power plant, which is

invested by IPP, is defined as whole power plant and transmission lines to the grid of

customer27. Follow that, the investor will bear the cost for Giap Trung hydropower and MV


-1,500

-1,000

-500

0

500

1,000

1,500

2,000

Grid connected hydropower Off grid hydropower

Net

Pre

sent

Val

ue (m

il V

ND

)

0%

2%

4%

6%

8%

10%

12%

14%

Inte

rnal

Rat

e of

Ret

urn

(%)

Net Present Value Internal Rate of Return

41

transmission lines to national grid (to nearest EVN’s substation, which is 7.5 km distance),

hereafter called “hydropower plant”. The investment cost of investor is estimated VND

5,898.2 million. The remaining of the scheme, hereafter called “commune grid”, which

includes MV lines to the commune, transformers located in villages, LV

transmission/distribution lines and connection fee, will be cover by GOV and local

household’s contribution in accordant with clause 5, chapter VI, Decree 45/2001/ND-CP28.

The figure of 4,108.3 million VND is calculated for investment cost of the commune grid.

Figure 8.1: Allocation of Investment Cost

Government and

households38%

Investor62%

At present, there is no existing power utility available to take over the commune grid. The

organization or individual, who will operate the grid should involve into the project from

preparation stage to implement the investment, which is considered as a part of the whole

hydropower scheme. There are 2 options for the management of the commune grid are put

into consideration as follows:

1) The grid will be constructed and operated independently from the power plant by a

entity such as electrical cooperative or electricity group, which may comprises of

members of the commune or any interests individual. The entity will act as a retail

dealer buying electricity from the power plant to deliver to every household.

Wholesale tariff applied to the retail dealer and retail tariff to households will be

defined by negotiating between investor and the entity, and between the entity and


42

households, respectively. Clear ownership and operation responsibility is an

advantage of the option. The investor will responsible for the power plant only,

avoiding complication of contracting and collecting money from every household.

However the option has following disadvantages (i) the retail tariff charged to the

households is likely very high29; (ii) Poor maintenance to the grid due to lack of

trained staffs; and (iii) Difficulty in construction caused by lack comprehensive

management, lack of cooperation among constructors, etc that may lead to longer

period of the construction.

2) The investor will construct and operate the grid as a part of the hydropower scheme.

The power plant sells electricity directly to households and responsible for repair and

maintenance of the grid. Investment cost for the grid will be transfer to the investor

as a grant during construction period. The retail tariff will be defined by discussion

among the investor, representative of the commune and the Department of Industry

of Ha Giang province. The option might terminate all disadvantages of the previous

option, therefore supposed to applied for Giap Trung hydropower project.

8.2 Mobilization of investment capital

8.2.1 Capital for Commune grid

According to clause 5, chapter VI, Decree 45/2001/ND-CP issued 02.08.2001 by GOV 30

Investment cost for transmission and distribution facilities including 04 kV backbone and

branch lines will be cover by state budget. Connected households should be responsible for

connection to their house including meter. In additional, they need to pay a connection fee,

which is stated by EVN of VND 450000/connection, and other contribution in kind depends

on the practical situation. Total capital contributed by GOV and household is VND 4,108.3

million.

8.2.2 Capital for power plant

Investor contributes an investment cost of VND 5,898.2 million for hydropower. The

investor can mobilize all possible financial sources for the project. Specific financial sources

29 High tariff is experienced in most rural areas that has grid operated by electricity cooperative or electricity group. The reasons are (i) high losses including technical and non-technical reasons, (ii) corruption, and (iii) The cooperative or group have advantage to force households pay for higher tariff. 30 Construction Publish House, Hanoi 2001, p. 39

43

as well as financial condition will be defined at further stage by investors. Hereafter are

possible financial sources might be put into consideration to mobilize for the project:

Grant

Grant is the capital contributed to project without repayment. Grant or subsidies from

government may be targeted towards a particular aspect such as non-polluting generation or

rural electrification. Grant help to reduce borrowing requirement then benefit investors and

customers. Under present circumstance in Vietnam, Giap Trung hydropower investors can

expect grants from following sources:

(i) From GOV/province of Ha Giang: Since Giap Trung is one of the poorest

communes in the province then support is needed to improve living standard of

the people. In addition, the project belongs to rural electrification program then

investors can apply for the grant from GOV ’s as stated in clause 50, chapter VI,

Decree 45/2001/ND-CP31. In fact, however, the grant appears not realistic since

GOV are expressing not willing to subsidy for grid connected power project but

support by committing to purchase all the energy output from these projects at

reasonable price.

(ii) From multilateral or bilateral agencies for development support: The grant is

more realistic since there are several organizations are willing to fund for such

the project in Vietnam on Project Planning, Engineering Design stage such as

Japan International Cooperation Agency (JICA), Swedish international

Development Agency (SIDA), etc. In order to get the grant, investor should

summit a proposal to the organizations and/or Vietnamese authorities for

approval.

Subsidy from Prototype Carbon Fund (PCF) and Global Environment Facility

(GEF) also might be put into consideration. PCF’s subsidy comes from purchase

credits based on calculated emissions from baseline carbon emissions with the

price paid to SPPs at US$ 3 – 4/ton. 25% of the amount will be paid upfront, 75%

over term years (the term last from 10 to 21 year)32.

31 Construction Publisher, Hanoi 2001, p. 63

32 Steven Ferrey, 2002, p. 18

44

(iii) From non-governmental organization as contribution towards socio-economic

advancement

Equity

Equity is the investment capital contributed by investors. At present no regulation states

proportion of equity for investment capital for IPPs in Vietnam. Investors tend to reduce

their contribution due to lack of capital available and bank’s interest rates are often lower

than their opportunity cost. In addition, investors think this also reduces their risk in

investment. However, the banks and financial funds always expect a high equity rate from

investor to ensure that they really involve in the investment. As a rule of thumb, a rate of 20-

30% from equity to investment capital is acceptable in Vietnam. A figure of 30% investment

cost equivalent to VND 1,769.5 million VND is assumed to be contributed by investor on

equity.

Loans

Investor can mobilize investment capital from two kind of loan (i) Concessionary loan, and

(ii) commercial loan.

Concessionary loans

Concessionary loan is understood as “soft loan” which has low interest rate and long grace

and repayment period. For Giap Trung hydropower the loan can be obtained from fund for

rural electrification program which is conducting in Vietnam with the interest rate about

3%/a – 6.5%/a33. Investor also could search Concessionary loan directly from multilateral or

bilateral agencies such as World Bank, PCF, GEF, SIDA, JICA, JBIC, etc. At present World

Bank in Vietnam has an available fund for SPP program development34. To get the loan

investor need to submit proposal to World Bank Vietnam and MOI for approval.

Concessionary loans also may come from electrical and mechanical equipment suppliers

who offer the payment by installment with very low interest rate (from 1% to 3%)35. It is

33 Interview by author with Mr. Pham, MOI, 28.10.2002

34 Steven Ferrey, 2002, p. 19

35 PECC 1

45

assumed that investor will get 30% investment cost, equivalent to VND 1,769.5 million on

concessionary loan with interest of 6.0% in average36.

Commercial loans

The most favor commercial fund for the projects is Fund for Investment Promotion (FIP)37.

The interest rate of the fund is regulated at 9%/year but might be lower in some cases. It is

expected that the investor can borrow the remaining 40% investment cost from the fund with

interest rate of 9%, grace and repayment periods are 1 and 10 years, respectively. In case, the

fund refuse to provide all required investment investor can search other loans from the Bank

for Agriculture and Rural Development (BARD), Bank for Investment and Development

(BID), etc with a little higher interest rate.

9 Institutional issues

9.1 Institutional framework for power sector

Vietnams energy sector is owned and controlled by the central government. The Ministry of

Industry (formerly the Ministry of Energy) is responsible for policy and oversight of the

power sector. Electricity Corporation of Vietnam (EVN) is responsible for all the industry

development and regulation.

EVN is a State Corporation established in 1995 under the State Enterprise Law. Under the

current regulations (Government Decree No 80), EVN is responsible for the management,

operation and development of Vietnam's entire power generation, transmission and

distribution system. This is done through a number of power sector entities. Those that may

play a part in the establishment and operation of small hydropower stations are:

1) The Institute of Energy (IOE) in identification and planning.

2) The Power Engineering Consulting Companies (PECC1, 2 and 3) in investigation

and design.

36 The similar proportion is obtained by Ta Liec grid connected hydropower in 2000. Source PECC1.

37 Fund for Investment Promotion is non-profit fund formed and run by GOV aiming to finance for development projects especially key and preferential projects. The fund offers lower interest rate and longer amortization period compared to other funds.

46

3) Transmission business unit (National Load Dispatch Center and 4 Transmission

Companies) in load dispatch though small hydro could be treated as part of the load

and not require central dispatch.

4) The three Power Companies (PC1, PC2 and PC3) in distributing power in the rural

areas.

5) The construction companies.

The retail tariff applied for electrified areas under direct management of EVN is regulated by

GOV based on the proposal by EVN. At present the retail tariff is about 2/3 of the long-term

marginal cost38 (LRMC) representing heavy subsidy from GOV to power sector. For areas

out of the EVN's grid, the tariff is defined through negotiating between seller and buyer.

9.2 New electricity law and the impact39

A Draft Electricity Law is currently in circulation amongst government agencies. However,

it is expected that there will be considerable change in the law and eventually supersede

Decree No.80.

The draft Electricity Law is understood to have the following aims:

(i) Establish a regulatory framework for the power sector

(ii) Protect the autonomy and commercialized operations of enterprises.

(iii) Specify rights and obligations of construction enterprises and consumers.

(iv) Establish regulatory functions of the Government agencies in planning,

licensing, pricing formulation, management and inspection of electricity

activities.

(v) Specify the principles for electricity price determination, one of which is non-

monopoly pricing.

38 Bogash, 2000, p. 5

39 Worley, 1999, p27

47

(vi) Encourage private sector investment in the power sector, especially rural

electrification, and help to reduce barriers to the functioning of market

forces.

(vii) Commercialize and corporatise the power sector, including distribution

utilities

(viii) Allow and ensure fair competition in electricity production and trading.

(ix) Allow various forms of investment and ownership in the generation sector.

(x) Minimize and simplify administrative controls on IPPs.

The final Draft Electricity Law is submitted to the National Assembly at the end of 2000 and

is expected to become law by the end of 2003. In the mean time, Decree No.80 is to be

adjusted by three decrees40 currently at different stages of preparation.

Under the existing Decree No.80, small hydropower projects would be planned, constructed

and operated by EVN, the work at each stage being allocated to the appropriate entity. The

expansion required to meet growth in demand and government objectives is greater than can

be met by EVN and GOV resources. Institutional growth to meet this expansion is not a

practical option. The Electricity Law will allow the shortfall to be met by IPPs based on

commercial mechanism. GOV supposes that local interests will develop the small

hydropower projects with the assistance of commercial companies. The prospective

Electricity Law will provide a legal framework for this. In the interim, until the Electricity

Law becomes law, it is expected that interim decrees will be made to meet specific cases.

These are likely to conform to the draft Electricity Law.

9.3 Applications and approvals

In addition to electricity law, project rights must be obtained under laws governing foreign

investment and environmental protection and compensation.

According to clause 12, chapter II, Decree 45/2001/ND-CP 41 and experience from

implemented projects, development of a small hydropower project by local and commercial

interests will involve the following steps:

40 Latest Decree is 45/2001/ND-CP issued August, 02nd , 2001 by GOV 41 Construction Publisher, Hanoi 2001, p. 37

48

1) Preparation or purchase a pre-feasibility study.

2) Signing of a Memorandum of Understanding (MOU) with EVN. MOU can be

obtained only by a licensed and registered business entity.

3) Preparation of a feasibility study, and environmental and social impact assessment

for approval.

4) Approval is granted by an Evaluation Committee comprising representatives of

relevant authorities and other agencies in accordant with clause 3, chapter I, Decree

45/2001/ND-CP42 assigned to review the proposed development.

5) Investment approval must be obtained from the appropriate Ministry-Prime

Ministerial approval is required in the case of foreign investment.

6) The power purchase agreement with EVN can be finalized once the above steps have

been completed. Power can be sold only to EVN.

7) Applications to the appropriate authorities for:

- Construction approval.

- Approval of land use, clearance and compensation.

- Import licenses for imported plant and equipment.

- A grid interconnection.

The project may proceed once these authorities are obtained.

9.4 Institutional development

Experience in developing IPP in Vietnam 43 has reported reluctance of some investors

involved in the process. For most of them the process is seen as too complex and lengthy

requiring negotiation at many stages and have stressed a need for simplification.

Theory, most of the steps listed above can be routine applications for authority from

government agencies once the planning approval has been obtained. If investors can provide


43 Information gained in workshop on PPA in Hanoi, December 2002

49

the project, which is developed with the appropriate consultation, and has obtained the

planning approval and meets GOV objectives as well as EVN regulations, It seems no reason

why these approvals should not be expeditiously granted. In fact, however, the process is

complicated and time consuming. The main reason is lack of comprehensive regulations and

criteria for approval and no clear responsibility of concerned authorities as well.

The procedures are new and have been applied in only a few small hydropower cases so far.

The system should improve with practice. Test cases need to go through to test the system

and show where improvements should be made. Lack of confidence will inhibit investment

at the outset and delay the opportunity for investment.

To meet the objective of GOV in promoting renewable energy development and rural

development, the number of the projects need to increase markedly. To support that, the

development process needs to be simplified and clear. Standard criteria and requirement

need to be set up for approval.

10 Legal framework for setting up enterprise

At present, IPPs/SPPs are investment models to be encouraged to develop in Vietnam in

order to (i) meet increasing demand of electricity and electrify local households; (ii) lessen

financial burden of stage budget on investment of power project and; (iii) increasing

efficiency of natural resource utilization to generate electricity.

It is intended that local utility will be set up to develop Giap Trung hydropower project as a

SPP with the purpose of (i) Provide electricity directly to local people and (ii) selling

electricity to national grid. According to enterprise models stated in “Laws of Enterprises44”

the local utility can be either (i) Jointly -Owned Utility (Share Holding Company) or (ii)

Liability Limited Company.

In general, Joint Owned Utility or Liability Limited Company is owned by a number of

shareholders 45 who hold either shares (in case of Jointly Owned Utility) or capital

contribution certificate (in case of Liability Limited Company). Shares can be sold freely

while capital contribution certificate can be sold to a non-member only after having offered

44 National Political Publish House, Hanoi 1999

50

these first to the co-members for purchase. Jointly Owned Utility's organization structure

consists of three level: General Meeting of Shareholders, The Board of Management and the

general director, and his management team while a Limited Liability Company's structures

consists of a members' Council (in case of Limited Liability Company has more than one

member), a Chairman of the Member's council and a General Director, who can be identical

the Chairman. The detail organization structure of Jointly Owned Utility and Electricity

Liability Limited Company are illustrated in figures 10.1 and 10.2.

Figure 10.1: Organization structure of Jointly Owning Utility

45 Maximum 50 shareholders for Liability Limited Company and unlimited number of shareholders for share holding company.

General meetings of shareholder

Board of Management

General Director

Operators Accountant Treasurer Supervision and billing team

51

Figure 10.2: Organization structure of Liability Limited Company

Due to limits on membership, the management structure of a Liability Limited Company is

slightly simpler and more direct than in a Jointly Owning Utility. The Member Council

resembles the Assembly of Shareholders, but has more in-depth discussion on company

policy and strategy due to the absence of a management Board. The Chairman of the

Members Council can, if he is different from the Director, perform some of the supervisory

functions on daily management, which a Board performs in JSC. However, flexibility to

adjust of jointly owning utility is greater due to their corporate governance structure, which

eases decision taking on restructuring issues and due to their broader range of financing

option.

The investor will decide which model is suitable in the later stage. However, according to

experience on similar project in the Center of Vietnam, it is auspicious to get involve of Ha

Giang People Committee as a jointly - owner to facilitate project development process. This

will help to simple project approval process; reduce time for clearance and compensation,

etc. It is also advantageous to employ local people to work for the local utility.

According to " Laws of Enterprises46", Provincial Planning and Investment Department of

Ha Giang province is authority to grant business license to the local utility. To establish a

electricity utility in Giap Trung commune, the follow steps must be followed:

46 National Political Publish House, Hanoi 1999

Member of Council

Chairman of Members Council

General Director

Operators Accountant Treasurer Supervision and billing team

52

1. A founding assembly of shareholders/ council members must be held. List of

shareholders/ members with contributed capital proportion and its terms.

2. A Board of Management will be nominated (in case of jointly owning utility),

and a utility general director, the plant operators, the accountant, treasurer must

be appointed, the supervisory and billing team must be set up.

3. A bank account must be opened for the founding capital of the company, which

must be paid in.

4. The paper work for the official registration of the utility as a company (officially

recognized, independent legal person) must be completed and processed that

consists of:

- Business registration application

- Utility Charter

- Founding shareholders/ jointly - owners Agreement

- List of founders/ jointly - owners

- Bank statement confirming legal capital

5. The paper work for the licensing of the company as an electricity utility in power

generation and distribution must be completed and processed that includes:

- An investment license or investment decision granted by Ha Giang Peoples

Committee.

- A license for electricity activities granted by Provincial Department of

Industry.

- A tariff approval and Power Purchasing Agreement (PPA) with EVN that

include identifying the connection point with the national grid, approval on

operational procedure of the Power Plant.

Besides, the local utility has to sign PPAs with local consumers in the serving area that

include households and productive loads.

According to Laws of Enterprises, the Local Utility has to declare on its establishment on

local newspaper within 30 days since the date of granting business licensee.

53

11 Economic and financial evaluation

11.1 Tariff structure

11.1.1 Ability and willingness to pay for service

The price of the main alternative fuel tends to benchmark the willingness and ability of

consumers to pay for electricity. It is assumed that after electrified the households will shift

from using substitutable energy sources to using electricity. The following energy sources

are expected to be replaced by electricity in Giap Trung commune:

(i) Pico for lighting and TV, Radio

(ii) Kerosene and paraffin for lighting

(iii) Dry cell for touch, radio and cassette player

(iv) Diesel for productive and services use

Pico

Pico is reported the most popular energy sources for lighting with 72% of household owning

or sharing a Pico. These Picos mainly comes from China and installed by the residents

themselves. These have a rated, though probably not actual, output of 300-1000 kW, and

cost VND 250,000-700,000 each. They are most commonly used for lighting, TV and Radio.

The Pico often last 2-3 years and could not be used round year, especially in dry season due

to stream flows drop below operating parameters. When asked why all residents in the

commune do not purchase a Pico-hydro, the reason cited is usually that they are too far

distant from a stream, not that residents cannot afford it. As the bearings are of poor quality,

and windings are not sealed, operation and maintenance of Pico-hydro typically costs each

year the capital cost of replacement. The monthly maintenance cost of Pico is ranging from

VND 5000 to 40000 resulting average of VND 13000. The yearly cost for 1 Pico, therefore,

is estimated VND 298743 and for the whole commune is VND 121.0 million/year.

Kerosene and paraffin

Even 72% of households own or share a Pico but kerosene is still widely used in the

commune with 97% of households using kerosene for lighting with monthly consumption

ranging from 0.2 liter and 4 liter per household. The considerable variation in Kerosene

consumption among the households can be understood as the result of “with” and “without”

54

Pico for lighting and entertainment. Average monthly consumption is calculated 1.4

liter/households resulting in yearly fuel cost for kerosene of VND 45.1 million for the whole

commune based on the fuel cost VND 5000 per liter47.

Fuel cost for paraffin is very small that can be neglected.

Dry cell battery

Dry cell battery is used for torches and powering radio and cassette player. The average cost

is about 2500 VND/pair (1.5 V type). Calculation of 4.4 pairs per month adds 9600 VND to

the monthly energy budget. With assumption of the figure 50% is consumed for radio and

cassette player that is can be replaced be electricity from the grid. Then cost for dry cell

batteries is calculated VND 28.3 million/year for the whole commune.

Diesel fuel

Diesel fuel consumed for rice husking and wood processing will be considered as the

substitute energy source for electricity.

Total diesel consumption for rice husking is reported 4620 liters of which 1848 liter

equivalent to 40% is expected be replaced by electricity due to difficulty in transportation

and the people's habits.

The figure of 12045 liter48 is calculated for diesel fuel for wood processing based on

projected electricity consumption and assumed efficiency of diesel motor and electrical

motor are 25% and 75% respectively.

Total cost for diesel is, therefore, estimated VND 76.4 million with the price of 5500

VND/liter49.

Ability and willingness to pay for service

From calculation above total annual expense for energy sources that can be replaced by

electricity when the commune is electrified is VND 268.0 million. Detail calculation is

illustrated in appendix 5.

47 Recorded during field trips at the commune

48 Due to no actual consumption was recorded.

49 Recorded during field trips at the commune

55

11.1.2 Tariff for the commune

According to clause 38, chapter IV, Decree 45/2001/ND-CP50 the retail electricity tariffs for

domestic use are as follows:

(i) The standard tariff structure51 will be applied for area supplied by national grid.

The lowest level of the tariff is 660 VND/kWh and up to 2000 VND/kWh.

(ii) For the areas, which are supplied by non-utility, the tariff is defined by

negotiating between seller and buyer.

Follows the regulation, tariff supposed to be applied in Giap Trung commune is set up by

negotiating between investors, acting as seller and local households, the buyer. The tariff

should be meet two criteria (1) Affordable for the households, and (2) Cover the production

cost of the supplier.

As estimated on “Ability and willingness to pas for the service” the annual total fuel cost for

Giap Trung commune is VND 268.0 million. The service can be met by 163428 kWh

electricity provided by the hydropower scheme then the willingness to pay for 1 kWh

electricity of the commune can be estimated at 1640 VND/kWh (that is total present fuel

cost divided by electricity demand). From the supply side, the investor can sell electricity at

the price of 582 VND/kWh to national grid52. To sell electricity to the commune, supplier

need to cover O&M cost of the commune grid, which is estimated 61.6 million VND,

equivalent to 1.5% of investment cost, plus cost of 25 – 30 million VND for monthly record,

billing, collecting money, etc means the supplier pays additional cost of 85 – 90 million

VND in total, equivalent to 530 to 560 VND/kWh. The price, which can cover production

cost for supplier, therefore, is estimated 1100 to 1200/kWh lower than ability to pay of

households. Therefore the price of 1200 VND/kWh is rational and supposed to apply for

Giap Trung commune.

The proposed tariff is higher than average tariff applied for electricity provided from

national grid. However, the gap will be decrease dramatically when the average national

grid’s tariff likely increases from 5.2 US cent/kWh (800 VND) to 7.0 US cent/kWh (1100


51 Issued by GOV which is a stair tariff increasing with the amount of electricity consumed.

52 See 11.1.3 “tariff to national grid”

56

VND) by the year 200553. At present tariff ranging from 1000 to 1300 VND/kWh are

applied in some areas provided by off grid connected hydropower and even national grid54.

The fact shows that the price is affordable for the households since the monthly cost for

electricity ranging from 13000 to 40000 VND for 12 - 30 kWh consumption. The reason

caused difficulty in rural electrification is the costs of connection, not the costs of electricity

use. Interviewed people in the commune also expressed their willing to pay for such amount

of money for their consumption based on the tariff 1200-13000 VND/kWh.

11.1.3 Tariff for electricity feeding into national grid

Even after great effort of GOV, particularly MOI and EVN as well as support from WB and

other international organization, a Standard Power Purchasing Agreement has not been

established yet. The purchase tariff applied for SPPs, which is conducting in Vietnam, is

defined through negotiation between EVN and SPPs. Hopefully; however, the Standard

Power Purchasing Agreement will be published very soon.

In the workshop on PPAs hold in Hanoi on 20th December 2002, representative of EVN, Mr

Do Quang Tri, vice director of EVN, one again stated EVN's support to SPPs by buying all

electricity generated by SPPs following a standard Power Purchasing Agreement, in which

the purchasing tariff, in principle, will be defined based on the avoided cost of EVN. For

coming time, due to no SPPA available, the tariff will be defined at reasonable level that can

compensate cost and create profit to IPPs through negotiation between IPPs and EVN.

In practice, some IPPs have contracted to EVN selling electricity to the national grid at the

tariff ranging from 3.5 US cent/kWh to 4.5 US cent/kWh55. One of the investors, Urban and

Industry Zone Investment Company, in 2002 have signed a contract to feed electricity to the

national grid from 1040 kW Sork Phu Mieng small hydropower at the tariff presented in

table 11.1.

The actual purchasing tariff for Giap Trung hydropower will be definded by its owner and

EVN at next step. However, in the study to facilitate calculation, the tariff for Srok Phu

Mieng is assumed to be applied for Giap Trung hydropower.

53 www.vnexpress.net, printed on 10.02.2003

54 Union Newspaper, issued on 18.08.2002

55 EVN

57

Table 11.1: Purchasing tariff for Srok Phu Mieng hydropower56

(The tariff excluding VAT tax)

Currency Wet season

(July 1st to October, 30th)

Dry season

(October, 1st to June, 30th)

US$ cent 2.5 4.5

VND 385 693

11.2 Economic evaluation

Economic evaluation is done from the economy point of view that allows assessing

efficiency of allocation of scarce national resources. An investment is considered efficient if

benefit created by the investment is greater than the paid cost. To evaluate economic

visibility of Giap Trung project, method "Cost and Benefit comparison" is used with

economic indicators as follows:

(i) Net present value (NPV)

(ii) Economic internal rate of return (EIRR)

(iii) Product unit cost (Pc)

Economic cost is all expenses to set up the project excluding tax and internal transfers. To

simplify a conversion of 0.9, which is accepted in Vietnam57 is used to convert financial cost

to economic cost resulting the figure of VND 9005.8 million for economic cost of the

hydropower scheme.

Economic benefit of the projects comprises of:

(i) Benefit of electrification for the Giap Trung commune. Economic benefit is

calculated at 4213 VND/kWh electricity provided to the commune58.

56 Official dispatch number 3429 CV-EVN-KD&DNT

57 EVN, PECC 1

58 See 7.3 “Economic benefit of investment”

58

(ii) Electricity feeding into the national grid. Monetary value of the benefit is

calculated equal to economic avoided cost59 of Vietnam's power system which is

presented in table 11.2

Table 11.2: Economic avoided cost to EVN 60

Tariff Dry season Wet season

US$ cent VND US$ cent VND

Energy 4.73 710 2.81 422

Energy plus capacity 6.73 1010 4.81 722

Result done by the Project Analysis Model show the Economic Net Present Value of the

project is VND 3070.6 million, equivalent to US$ 201410, Economic Internal Rate of Return

reaches at high levet at 15.2%, and the unit cost of 850.8 VND/kWh or US 5.5 cent/kWh. It

is concluded that the project is economically viable. Detail calculation is presented in

appendix 5.

Sensitivity analysis

Sensitivity analysis is done to verify the project viability in unfavorable circumstances as

follows:

1) The investment cost increases 10%

2) The annual output decrease 10%

3) Load demand of the commune decrease 10%

Sensitivity analysis result illustrated in table 11.3 and figure 11.1 shows that even in the

considered unfavorable circumstances Giap Trung mini hydropower still economically

feasible. It is efficient to allocate national resource to develop the hydropower

59 Avoided cost for energy only

60 Tran, 2001, p 26

59

Table 11.3: Economic Sensitivity Analysis

Sensitivity cases

Indicator Base case Investment increase 10%

Output decrease 10%

Commune demand

decrease 10%

NPV (mil. VND) 3,070.6 2,103.9 2,407.6 2,559.5

IRR (%) 15.2% 13.3% 14.1% 14.4%

Unit cost (VND/kWh) 850.8 934.5 945.9 850.4

.

Figure 11.1: Economic Sensitivity Analysis

11.3 Financial Analysis

Financial analysis is done from the investor interest to the project. Financial viability is the

most important factor deciding the attractiveness of a project to investor. Investor is willing

to develop the project only the investment could bring profit to them. Financial analysis on

equity, therefore, is carried out for Giap Trung hydropower. Financial indicators are taken

into consideration as follows:

0

500

1000

1500

2000

2500

3000

3500

Base case Investmentincrease 10%

Output decrease10%

Commune demanddecease 10%

12%

13%

13%

14%

14%

15%

15%

16%

NPV EIRR

60

(i) Net present value NPV

(ii) Internal rate of Return FIRR

(iii) Unit cost before tax Pc

(iv) Payback period PBP

Discount rate of 12%/year is used in the calculation that reflects the opportunity cost in

Vietnam and risk in hydropower development.

Analysis period is 25 years from the project go into commercial operation.

Costs of the project comprises of:

(i) Investment capital: Total capital investment for the project is estimated VND

10,006.5 million, equivalent to US$ 649,770. Of which VND 1,769.5 million

(30% investment cost) will be contributed by the investor as equity, VND 1,769.5

million comes from foreign loan with interest rate of 6.0%, amortization period

of 10 years. The rest of VND 2,359.3 million will be mobilized from local loan

with interest rate of 9.0%, amortization period of 10 years.

(ii) Operation and maintenance costs, which comprises of employee's wage,

maintenance and repair of electro-mechanical equipment, civil works and

transmission lines, insurance against electrical and mechanical equipment

breakdown and administration costs, is estimated 3% and 1.5% of investment

cost for hydropower plant and transmission/distribution lines, respectively. In

additional, the plant need to pay for money collection done by local labor and

billing. The cost is estimated VND 20.0 million. In total, the O&M is VND 236.2

million.

(iii) Water use fee is 1% of total turnover of the power plant.61

(iv) Taxes: According to Ordinance of Management of Investment and Construction,

Regulations on promotion of investment and developments, the local utility is

exempted from land tax. Enterprise tax imposes on profit of enterprise. The tax

rate varies to location, business field, size of impose enterprise. For Giap Trung

61 Stipulated on Natural Resources Utilization Law issued on August 12th 1995

61

project, the plant is exempted for first 4 years sine profit occurs, pays

concessionary rate of 7.5% for next 7 years and 15% for the following years62.

VAT rate is 10% of turnover applied in Vietnam for electricity commodity.

However, the tariff excluding VAT tax is considered then the VAT is not

considered in the calculation.

Revenue of the project comprise of:

(i) Revenue comes from selling electricity to the commune grid. The annual

turnover is calculated based on power demand projection for the commune and

the tariff of 1200 VND/kWh63. The revenue is increasing over years due to

increasing of the commune demand.

(ii) EVN will purchase all the remaining energy from the power plant after the power

plant has supplied electricity to the commune. The tariff to the electricity fed into

national grid is estimated at 582 VND/kWh.

(iii) Return input VAT: The plant will receive the input VAT tax from GOV. It is

assumed plant receive the money at the end of construction period, values VND

500.3 million, equivalent to 5%64 of investment cost.

Detail input data and calculation for financial analysis is presented in appendix 5.

Financial analysis calculation done by Project Analysis Model gives the results as follows:

Net present value VND 305.7 million

Internal rate of Return 13.8 %

Payback period 10 years

Unit cost before tax 617.6 VND/kWh

The project is financially feasible. However, if take risk in hydropower investment into

consideration, the project is attractive to investor but not at high level. To encourage private

62 Construction Publish House, 1999, p. 96, 99, 132,136

63 See 11.1 “Tariff structure”

64 PECC1. The figure is accepted in Vietnam to estimate input VAT for hydropower.

62

investor to invest in the project, promote measures are needed from GOV such as accept the

purchase tariff equal to avoided cost of EVN, exempt enterprise tax or “soft” loan with lower

interest tare and longer amortization period, etc. The effect of the measures will be discussed

in sensitivity analysis.

Sensitivity Analysis

Sensitivity analysis is done aiming to verify the viability of the project incase there is

fluctuation of factors, which affect to the project. The fluctuations affect to project viability

into two trends (i) Advantage and (ii) disadvantage. For that purpose, sensitivity analysis is

done for following alternatives:

Advantage trend:

- Tariff to national grid increase 10% near to energy avoided cost of EVN.

- The commune electricity demand increase 10%.

- Investor gets the local loan with interest rate lower to 7%.

- Proportion of foreign increase to 70%, no local loan needed.

Disadvantage cases:

- The investment cost increases 10%.

- Annual output decreases 10%.

- The commune electricity demand increase 10%.

- All loans need to mobilize from local loan.

Sensitivity analysis results show that tariff to national grid and financial

arrangements are the most sensitive factors coming from outside, while investment

cost and energy output are from the project. Investors, therefore, need to verify the

technical data. It is suggested that a reputed consultant should be hired to carry

further stage of the project. Beside that, result of negotiating to EVN and practice

capital mobilization also need to put into consideration to come up a final decision

for Giap Trung hydropower project.

63

Table 11.4: Financial Sensitivity Analysis

Indicator Base case Tariff

increase

10%

Commune

demand

Increase

10%

Foreign

loan reach

to 70%

Interest

rate 7%,

Investment

increase

10%

Output

decrease

10%

Commune

demand

decrease

10%

Local loan

account

for 70%

NPV (mil. VND) 306.7 781.2 380.4 562.4 478.2 (263.9) (247.6) 233.0 113.6

IRR (%) 13.8% 16.7% 14.3% 15.6% 15.0% 10.6% 10.6% 13.4% 12.6%

Payback period (year) 10 8 10 9 10 11 11 10 11

Unit cost (VND/kWh) 618 618 618 591.6 600 676 685 618 637

64

Figure 11.2: Financial Sensitivity Analysis

-400

-200

0

200

400

600

800

1,000

Tariffincrease

10%

CommunedemandIncrease

10%

Foreign loanreach to

70%

Interest rate7%,

Base case Investmentincrease

10%

Outputdecrease

10%

Communedemanddecrease

10%

Local loan account for

70%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

NPV FIRR

12 Business plan

12.1 Marketing Plan

Giap Trung hydropower will be built at river Nam Nung, 2.5 km distance from Giap Trung

commune, Bac Me district, Northern province of Ha Giang. The power plant with capacity

of 244 kW, annual output of 1.452 106kWh will supply electricity to the commune and

selling surplus electricity to national grid.

Since to be connected to national grid, the project can sell all energy output to the

commune and national grid with the tariff are 1200 VND/kWh and 582 VND/kWh,

respectively. Most revenue of the power plant will come from selling to national grid but

the figure will reduce over the year because of growing of the commune electricity

demand. That means that the turnover of the project will increase over the year due to

higher tariff charged to commune than that to national grid.

(i) It is clear that the proportion of electricity sold to commune in total selling

affects to revenue of the project, a decreasing of the selling means a reduction

in revenue and vice-verse. Therefore, promotional measure should focus on the

market. Followings are measures need to do to increase selling to the commune:

65

(ii) To sign commitment of electricity using with possible connected households.

(iii) Assure operation of the transmission/distribution system always in good

condition.

(iv) Encourage households using electricity by campaigns on benefit of using

electricity, safety in using, etc.

(v) Promote productive use by offering lower tariff

12.2 Production Plan

Electricity generated at powerhouse will be transmitted to EVN’s 35 kV substation (7.5 km

distance) and village center (0.8 km length) by MV 35 kV transmission lines. In the

commune, power is reduced to 0.4 kV by transformers to backbone lines and then

connected to households. The losses on transmission lines to EVN’s substation and on the

commune grid is estimated at 1% and 5% respectively.

The project comprises of hydropower plant and transmission/distribution grid system that

has life span expected 25 year. Total investment for the project is VND10, 006.5 million.

The construction of civil work and equipment supply will be implemented by tendering.

Since the scheme is connected to national grid then the plant can generated at 100% its

capacity with average annual output of 1.452 106kWh for every year.

Generally, the proposed hydropower scheme will be operated 24 hours a day. The plant

will occasionally be shut down in order to carry out necessary maintenance or repair work

at the plant. Whenever possible such work will be executed during dry periods, when the

limited river flow restricts hydropower operation anyway. Six employees will be

contracted as operators of the hydropower scheme. They will work in shifts of 8 hours. All

operators will be instructed and trained in the operation and maintenance of the

hydropower plant. The training of the operators starts during the construction of the

scheme. On-the-job training is provided throughout the commissioning and testing of the

plant leading to a smooth transition to normal operation of the plant. Operation and

maintenance procedures will be described in the special manuals for the micro hydropower

plant, which are prepared by the project engineer as part of the project implementation, or

provided by the equipment suppliers.

66

Maintenance schedule for civil work is presented in table 12.165. The suppliers of the

equipment, together with the operation manuals, will provide maintenance schedules for

the electro-mechanical equipment. The maintenance schedule for the transmission and

distribution facilities will be elaborated in close cooperation with EVN, whose standards

will be applied.

Table 12.1: Maintenance Schedule for Civil Work

Maintenance Schedule Civil Works All year Drought Flood Weir and Intake Check for boulder damage Monthly Daily Check for leaks, undercutting Once Flushing Sluice, Intake Gate Check operation Monthly Grease screw Monthly Adjust As needed As needed Settling Basin Grease flushing sluice screw Monthly Drain and clean Monthly Weekly Sealing leaks and general repairs Annually Headrace Canal Inspect for leaks, overflowing Weekly Daily Drain and Clean Every 3 months Clean culverts Monthly Daily Sealing leaks and general repairs Annually Fore bay Clean screen Daily Check screen Weekly Daily Grease valves Monthly Drain and clean Monthly Monthly Weekly Sealing leaks and general repairs Annually Penstock Visual check for leaks Monthly Repaint Every 2 years Visual corrosion check Once Inspection of supports Annually Powerhouse Check roof Annually

65 Source ENTEC AG, 2002

67

Power purchasing Agreement

(i) Power purchasing Agreement to Households

A contract on selling/buying electricity need to be signed between the investor and each

connected households in the commune. The contract should be in accordance with chapter

IV, Decree 45/2001/ND-CP 66 on selling/buying and using electricity. The main

components of the contracts are as follows:

- General information of seller and buyer.

- Purpose of electricity using, agreement on installation and equipment.

- Legal requirement to seller and buyer.

- Quality of electricity provided.

- Electricity measurement and record.

- Electricity tariff and form of payment.

- Right and obligation of seller.

- Right and obligation of buyer.

- Other agreements.

(ii) Power Purchasing Agreement to EVN

In order to sell electricity to the national grid the producer need to gain a PPA with EVN.

The investor and EVN will define the detail of the PPA in further stage. The PPA should

comprises main contents as follows67:

- General information of seller and buyer

- Period of the PPA and possibility to renew.

- Facility development/operation and interconnection.

- Testing and inspection.

66 Construction Publisher, Hanoi 2001, p. 44-60

67 Summarized by author from Draft Standard Agreement for Purchase of Electrical Energy from Small Power Producer which is prepared by MOI, EVN

68

- Tariff and term of payment

- Forecasts and meters

- Disruptions and outages

- Insurance

- Indemnification and limitation of liability

- Force majeure

- Default

- Dispute resolution

- Delegation and assignment

- Notices

- Miscellaneous provisions

Electricity fee collection procedure

With the purpose of saving time and facilitate the work, it is recommended that billing and

electricity fee collection will be done by heads of village, teachers or other prestigious

people in the respective village. After fee collection, those people will return the amount of

money to the accountant of the plant and get a small amount of money (VND 100,000 per

month) as gratuity.

Production cost:

- Employee' wage: There will be 10 operators and staffs employed for the power

plant. The monthly salary of VND 600,000 per person is estimated resulting the

annual wage for employee of VND 72 million.

- Maintenance and repair of Electro-mechanical equipment, civil works and

transmission lines: The figure of VND 10.0 million is considered for the

maintenance and repair, equivalent to VND120 million per year.

- Insurance against electrical and mechanical equipment breakdown is

calculated equivalent to 0.2% of the investment cost for the equipment. That is

VND 4.1 million.

- Administration and overhead is VND 20 million per year.

- Money collection cost is assumed VND 20 million per year

69

The figure of VND 236.2 million is, therefore, estimated for O&M cost of the hydropower

scheme.

12.3 Organization & Management Plan

It is expected that a Jointly Owning Utility company (investor and Ha Giang People

Committee) will be set up to run the power plant. Organization structure of the company

and related issues are illustrated in figure 10.1 and chapter 10 “Legal framework for setting

up enterprise”.

Director and management board allocates Right and responsibility of employed staff.

Pre-Operating expenditure is estimated at VND 50.0 million.

12.4 Financial plan

A financial plan for the first 5 years is set up for the company that includes estimation of

capital requirement; calculation on monthly cash flow statement and yearly cash flow

statement, profit and losses statement and balance sheet; and break-even point calculation.

12.4.1 Investment Capital requirements of the scheme

Total investment capital cost of Giap Trung mini hydropower is VND 10,006.5 million or

about US$ 649,770. Of this figure, grant from GOV for the commune grid is VND 4,108

million accounting for 40.6%, of the rest the investor will provide 30% equivalent to VND

1,769.5 million and mobilize from banks VND 4,128.7 million VND (70%). It is assumed

that the loan comes from two sources (i) Foreign loan VND 1,769.5 million (30%) with

interest rate of 6.0%, and (ii) local loan VND 2,359.3 million (40%) at interest rate of

9.0%. The level of contributions in capital is shown in table 12.2 and figure 12.1.

Figure 12.1: Investment Capital contribution

40%

18%18%

24%

Grant Equity Foreign loan Local loan

70

Table 12.2: Investment Capital Contribution

Unit: mill. VND

Particulars Total Grant Equity Foreign loan Local loan

Contribution 10006 1769 4108 1769 2359

Percentage 100% 18% 41% 18% 24%

12.4.2 Capital requirement

At the time of establishing the company, the following capitals are required:

(i) Pre-operation expense: pre-operation expense is registration fee (about VND

5,000,000), cost of purchased office facilities, administrative cost, etc. that is

estimated at VND 50,000,000.

(ii) Working capital: working capital is running cost of the company includes

wages, O&M cost of the scheme, administration cost, re-investment cost, etc.

that is estimated for 3 months. For Giap Trung hydropower, working capital is

estimated at VND 50,000,000.

Figure 12.2: Company capital requirement

12.4.3 Borrowed loan

As mentioned above, the loan comes from two sources, e.g. foreign and local loans. Both

loans have grace period during construction time (1 year) and installment period of 10

100%

0% 0%

Fixed Assets Pre-Operating ExpensesWorking Capital

71

years. Loan payment schedule for the project is presented in the table 12.3. Analysis of

yearly cash-flow shows that the company is able to pay both principal and interest within

10 years, as scheduled with total payment reaches to VND 5880 million.

Table 12.3: Loan payment schedule

Unit: mill. VND

Year Amount of Principal

Outstanding Installment Interest Total

1 4129 -413 -319 -731

2 3716 -413 -287 -700

3 3303 -413 -255 -668

4 2890 -413 -223 -636

5 2477 -413 -191 -604

6 2064 -413 -159 -572

7 1651 -413 -127 -540

8 1239 -413 -96 -508

9 826 -413 -64 -477

10 413 -413 -32 -445

Total -4129 -1752 -5880

12.4.4 Cash-flow statement, profit/loss and balance

Yearly cash-flow statement, profit and losses statement and balance sheet are shown in

tables 12.4, 12.5 and 12.6. During first 5 years, the company has to face lost due to revenue

could not cover the production cost. The profit will occur from the year 6th and then

increase steadily. Even bearing the loss during the first 5 year, the company still has strong

cash flow statement. First, company will receive input VAT tax return from GOV that

increase cash available up to VND 481 million in the first year. Secondly, because

depreciation value of fixed assets is greater than yearly installment then the company’s

increase over the year up to VND 520 million at the end of the year 5th. It can be concluded

that the company has stable cash-flow statement.

72

Table 12.4: Yearly Cash Flow Statement

Unit: million VND

Pre-operatingYear

Particulars Activity 1st 2nd 3rd 4th 5th

Cash Inflow

Equity 1919

Loans 50

Cash Sales 936 939 942 943 945

Collection A/R 936 939 942 943 945

Other income 500 0 0 0 0

Total cash Inflow 1969 1437 939 942 943 945

Cash outflow

Pre-operation Expenses 100

Fixed assets 10006

Salary -72 -72 -72 -72 -72

Running cost -120 -120 -120 -120 -120

Administration -24 -24 -24 -24 -24

Water using fee -9 -9 -9 -9 -9

VAT tax 0 0 0 0 0

Interest -331 -298 -265 -232 -199

Loan amortization -429 -429 -429 -429 -429

Enterprise Tax 0 0 0 0 -39

Other expenses -20 -20 -20 -20 -20

Owners withdrawels 0 0 0 0 0

Total cash outflow 10106 -1005 -972 -939 -906 -912

Net cash inflow 50 431 -33 2 37 33

Cash balance beginning 50 50 481 448 450 487

Cash balance end 481 448 450 487 520

73

Table 12.5: Profit and Loss Statement

Unit: million VND

Year Year 1st Year 2nd Year 3rd Year 4th Year 5th

Sales 1437 939 942 943 945

Less

Salary -72 -72 -72 -72 -72

Running cost -120 -120 -120 -120 -120

Water using fee -9 -9 -9 -9 -9

VAT tax 0 0 0 0 0

Depreciation -500 -500 -500 -500 -500

other Overheads -20 -20 -20 -20 -20

gross profit 715 217 220 221 223

Marketing 0 0 0 0 0

Administration -24 -24 -24 -24 -24

Operating profit 691 193 196 197 199

Interest -331 -298 -265 -232 -199

Net profit before tax 360 -105 -69 -35 0

Taxes 0 0 0 0 -39

Net Profit 360 -105 -69 -35 -39

74

Table 12.6: Balance Sheet Unit: million VND

Pre- YEAR Period 1 2 3 4 5

ASSETS

Current Assets Cash 50 481 448 450 487 520 Raw Materials Inventory 0 0 0 0 0 0 Work in process 0 0 0 0 0 0 Finished Goods 0 0 0 0 0 0 Accounts receivable 0 0 0 0 0 0

Total Current Assets 50 481 448 450 487 520 Fixed Assets Other Equipment 10006 10006 10006 10006 10006 10006 Less Depreciation 0 500 1001 1501 2001 2502 Net fixed assets 10006 9506 9006 8505 8005 7505

Total fixed assets 10006 9506 9006 8505 8005 7505

Other assets 100 100 100 100 100 100 Total 10156 10088 9554 9056 8593 8125

LIABILITY

Current liabilities Accounts payable 0 0 0 0 0 0 Loans payable 0 0 0 0 0 0

Total Current liabilities 0 0 0 0 0 0 Long term liabilities 0 Loans payable 4129 3700 3271 2842 2414 1985

Total Long term liabilities 4129 3700 3271 2842 2414 1985

Owners equity Capital beginning 1919 6028 6388 6283 6214 6179 Accumulated Capital 1919 6028 6388 6283 6214 6179 plus net profit 0 360 -105 -69 -35 -39 Grant 4108 minus withdrawels

Total Owners equity 6028 6388 6283 6214 6179 6140 Total Liabilities and Equity 10156 10088 9554 9056 8593 8125

BALANCE 0 0 0 0 0 0

75

12.4.5 Break event point

Break-even point calculation is shown in the table 12.7. The Company will have lost for

the first two years. After that company start gain profit if the revenue is not smaller 621

million VND for the 3rd year and so on.

Table 12.7: Break-even point

Break-even Point (BEP) 1st Year 2nd Year 3rd Year 4th Year 5th Year

BEP (revenue) (mill. VND) 986 953 921 888 821

BEP (%) 105 102 98 94 87

12.5 Community mobilization

Community mobilization needs to be done aiming to get local community involving in

project actively and positively. Active participation of community in the project will help

to maximize benefit to community and reduce any negative impact, if happens. The

community mobilization could be divided into several stages in accordant with project

processes.

Stage 1 (at project preparation)

The objective of the stage is to raise awareness within the commune of the project and the

benefit of electricity provided from the hydropower. A community mobilization team

comprising social and hydropower expert will be sent to the commune to have meeting

with the commune leaders, perform questionnaire and gather needed information.

During the first meeting, community will be informed of the objective of the project,

benefit of using electricity from the hydropower scheme compared to other energy sources

and requirement for households to connect to the scheme. The feedback of community will

be recorded for designing.

After have draft feasibility study, the community mobilization will come back to the

commune to inform them supposed tariff and total of payment for household after

connection to the scheme. Draft design of the power plant, particularly location and layout

of the distribution system, arrangement for installation of consumer connection and meters,

location and routing of hydro weir, intake, headrace canal and powerhouse, etc. will be

published in order to find out obstacles for land acquisition and resettlement aspects.

76

Potential social impact of the project to the commune is to be informed and discussed. Any

feedback from the commune will be recorded to improve final design. A campaign on

electricity safety is done at the stage as well. Finally, households are required to sign a

commitment of using electricity provided by the hydropower scheme.

Stage 2 (at construction period)

In the stage, community is encourage to actively involve in monitoring the construction

work, assure that construction component is followed the approved design at good quality.

Any insufficient element or complain needs to inform to investors. To support that one of

the members of the commune might be appointed into controlled board acting a link

between the community and investor.

Households are required to sign to Electricity buying/selling contract. This will be legal

basic for connection to the mini grid, billing and payment. Households are also consulted

in wiring in their houses, buying electricity appliances. A group of local residents will be

selected to hired by hydropower plant to recording and collect money from households in

their villages.

Stage 3 (at operation of project)

Campaigns on electricity safety will be continued regularly. A custom service will be

established to deal with any breakdown or support to households. The community is

required to be active in protecting the grid facilities, prevent any violation to the grid, for

example to build house to near the grid, etc.

13 Expected social impact of hydro power system

As already mentioned, Electricity is not new to Giap Trung, households started using

electricity for several years ago since the first Pico was installed in the commune.

Therefore, the benefit of the project to local people need to be considered what is

advantages may be offered to local people through using power from mini hydro power

rather than their current sources of energy.

First of all, the project will electrify the commune 7 years earlier than waiting for

connection the commune to the national grid.

77

Thanks to construction of the hydropower scheme, the access road from District to Giap

Trung will be improved that create favorable condition for transportation of local people as

well as to promote possible income generating and trade activities. The track from the

commune to the hydropower is also upgraded.

The scheme will require a small amount of land for construction of powerhouse and

associated facilities. The land, crop and tree lost will be compensated. The level of

compensation will be subject to consent of project-affected people, local authorities and

contractor. There is no water diversion for irrigation or domestic use along river from weir

to powerhouse then construction has no effect on water using.

Despite the fact that many people in Giap Trung own TV sets and radios, people

interviewed repeatedly stressed the importance of having a regular information source as a

means of ‘knowing what is happening in the outside world.’ Watching television is an

enjoyable time for local people and also a very important means for accessing news and

information from outside the commune. Electricity provides potential to regularly access to

information source. There is a potentially negative rose from accessing information from

outside that cultural values and indigenous culture may be affected and changed. But as

stated by local people, access to outside information is very important to them.

At present in the commune there is a total of 85 TV sets. Although some of these

televisions are colors TV, it is not possible to get color due to low quality of power

supplied from Picos. People expressed that, if the project could provide stable source of

electricity they would purchase more TVs, particularly color TVs.

Local people seemed fervent with possible of having good lighting at home. It is likely that

a stable source of energy in the evening will allow their children to study better. It is also

stated that the use of electricity in the evening would allow adults to carry on activities

such as sewing, weaving and housework more effectively. Currently, most of people stated

having a rest at evening. This does not mean they have no work to do but because they

could not do due to lack of lighting.

There are several ways in which the project offers opportunities for reducing labor loads.

Certainly, men and women can be expected to be affected differently.

There are already rice milling and husking machines in the commune, but fee for husking

by the machines is expensive. It may be anticipated that these services will become more

78

affordable, and people would use them more regularly, if the owners of the mills could

access to a cheaper, but reliable, source of energy. Currently women do milling and

husking, when it is done by hand, so this is a key way by which the project might bring

real improvements to women’s lives.

The project also has potential to reduce the current burden for women of collecting

firewood. (The survey and interviews show that firewood mainly done by women).

Currently, local women spend up to 2 hours every day to collect firewood. If households

could use electricity for cooking (e.g. electric kettles and rice cookers), women’s labor

loads will be reduced, and less wood will need to be cut from the surrounding hills.

However, the change from firewood to electricity for cooking could not happen

spontaneously. Currently, people can collect wood free from surrounding hills so they will

not be wiling to change to electricity. Furthermore, the use of electric kettles and rice

cookers is virtually unknown in the commune. Some effort could have to be made to

convince local people of the potential benefits of cooking with electricity and the changing

might be initiated by rich households when they start using electricity for cooking.

Households who owning pico hydro generators are expected likely to convert to use

electricity from the hydropower scheme. The main reason for this, as they said, is that pico

generators require almost constant maintenance and attention and costly. This is usually a

man’s job, and then the project might free men from this daily task.

Positive impact of the project to health of the inhabitants might be expected. Currently, the

health clinic in Giap Trung commune center is running two light bulbs up to 10:30pm

powered by the generator of the frontier guard post. Health professionals have two to three

years' training, but often cannot put it into practice because the lack of facilities. The head

of this clinic confirmed that electricity from the hydropower scheme would be an

improvement on the current situation. Improved lighting can be expected to improve the

conditions of care within the clinics. However electricity in commune clinic does not mean

leading to equip electrical equipment such as refrigerators, electrical sterilization facilities,

etc to clinic.

Changes from the use of firewood in households to the use of electricity for cooking can be

expected to bring improvements in the respiratory health of people within Giap Trung

commune. However, as stated above, it would need additional effort to convince people

using electricity instead of firewood.

79

The risks associated with improper use of electricity could be a negative impact. However,

as mentioned already, the use of Pico in the commune is very popular and local people

already have experience with using electricity. But a campaign on safety in using

electricity is still needed to both adults and children to prevent accidents from happening or

lessen their impact.

Currently, classrooms in the commune are not electrified and teachers use candles for

lighting in the evenings. Interviewed teachers do not think lighting for daytime classes is

necessary and stated no classes held in the evening. However, electricity could help

children do their homework at night and improve teachers living conditions. It is unlikely

that school budgets in the remote area could afford for electronic teaching aids (such as

audio visual equipment) but the presence of electricity in classrooms would certainly create

possibility for the future.

Long-term job opportunities created directly by the project are small since very small staff

needed for the hydropower scheme. Several people will be hired to collect money from

households living in the villages. However, during construction period, project requires

large unskilled labor, mainly for clearance, excavation, damping and transportation that

can be qualified by the local people. Day's wage about 40000 VND for unskilled labor,

found in the similar projects, will increase considerably household income during that

time. In order to assure that local people will be hired at reasonable wage, an agreement

between the commune and contractors might be needed giving preference to local people.

In additional, part time job might be offered to local people during operation time such as

clearing sand trap or mud accumulated in the canal, etc.

Finally, widening use of electricity for productive purpose will create more jobs and

increase income of the people in long-term. Electrification do support to development of

other carrier in the commune such as mechanical repair, battery recharging, sewing and

shops.

14 Risk and measures to overcome risk

Infrastructure development in general or hydropower development in particular entails a

range of uncertainties and risk. The risk analysis and possible measures to over come the

risk are very important to investors, assuring fusibility and sustainability of projects.

Following are possible risk the investors may face and measures to over come the risks.

80

Risk occurs during project preparation

One of the most common risk in the hydropower concerns to water availability, especially

to small hydropower. The risk might because of no data record available for the site or

limitation in the record. Models or methods used to estimate flow series still contain error.

And even a long-term record is available no assurance that the hydrology will not change

cyclically or even permanently. Vietnam has experienced not very few small or mini

hydropower could not operate due to lack of water. The reported reasons are inaccurate

design and deforestation in catchment area. Risk also happens in assessment of the

potential demand, which tend to over estimate. Na Po hydropower is an example, after 3

years operation the demand is only half of power potential68. To over come the risk, a

reputed consultant should be selected to conduct feasibility study. The cost for consulting

might increase but the cost is compensated by more reliable feasibility study.

Risk in Construction

The risk may come from lack of fully cooperation or understanding between designer and

contractors, from different between design and particular or simply from contractors. That

may lead to longer construction period and increase investment cost of project. It is

recorded that almost hydropower project in Vietnam, which is invested by EVN, have real

investment cost greater that designed cost from 5% to 20%69. The increasing is primary

caused by non-technical reasons. Turnkey approach might be a solution for the risk. In

addition, strictly monitoring and supervising activity should be done and long-term

warranty is recommended

Risk in Operation

The risk may be caused by faulty design, construction or manufactures that often occur

after a certain time, several years after the first commissioning. The risk also may come

due to decreasing in water available in short term of long term, especially for small

hydropower due to small catchment area. To minimize the risk necessary measures are as

follows:

- Long-term warranty from contractors, suppliers and designers

68 Interviewed with Mr. Ho Hao, PECC1, 25.10.2002

81

- The low proportion of equity in investment capital

- Protect catchment area.

For Giap Trung hydropower, extension of national grid to the commune also could be seen

as a risk during operation. National grid likely offered lower tariff to households due to

received subsidy from GOV. Therefore, local households will prefer to buy electricity

provided by national grid. To solve the problem, investor should require agreement from

GOV/EVN to feed all energy output to national grid.

Institutional, financial and commercial risks: The risk may come from changing in tax, fee

policy and/or regulations related to the investment. For example GOV gives up promoting

renewable energy development then supports to the project might be terminated. Of course,

difficulty will arise and the project will less attractive to investors. To avoid or lessen the

risk, investor needs to truly understand regulations and policy of the government, able to

foreseen and react flexible to any possible changing. In addition, investor could involve

public sector into project aiming to reduce the effect of changing and to share the risk.

15 Conclusion and Recommendation

Giap Trung commune is one of the poorest communes in Vietnam. Electrification the

commune is necessary to improve their standard of living and give they a tool to increase

their income.

Similar to other remote rural areas in Vietnam, power demand in Giap Trung is

characterized by very low load factor due to electricity demand is primary for lighting and

entertainment. In additional, scattered resettlement of the households will likely lead to

very high cost to electrify the commune.

To answer the question which option should be selected for the project to electrify the

commune and maximize benefit to national economy, a comprehensive comparison among

four possible options namely, “Grid connected hydropower”, “Off grid hydropower”,

“connection to national grid” and “diesel generator” has been done from two points of

view (i) Electrification of the commune, and (ii) Economic benefit of the investment. The

option “Grid connected hydropower” is proved to be the best one when has the lowest cost

69 EVN

82

for electrifying the commune and brings highest benefit to national economy. Connection

to the national grid might be a promising solution to promote small hydropower

development where economically. This helps to overcome the low demand for off grid

hydropower, which is one of the main reasons leading to high cost of rural electrification,

and create possibility to exploit hydropower potential to benefit from economic of scale.

Participation of private investors in power sector is new in Vietnam. This creates new form

of ownership and investment. Investor owns the hydropower plant and he is fully

responsible for his decisions as well as result of business that is strong believed to improve

the current situation of small hydropower (out of date technology, poor operation and

maintenance, and loose financial control).

Legal and institutional frame for the investment model is in process of development in

Vietnam. Private ownership in infrastructure just accepted not more than 20 years and

much shorter time is known for power sector, which was totally under the control of the

government. “Law of Enterprises” has established solid legal ground for private business.

Institutional frame for development of grid-connected hydropower is available even be

considered complicated and not efficient. Institutional improvement then is needed to meet

practice and promote development of the investment.

Electricity provided by the hydropower scheme likely improves standard of living of local

people, the primary target of the project. High quality electricity provided from

hydropower scheme gives them better service with lower cost compared to their present

energy source. For affordable cost, local people can benefit from the modern service,

which affects positively to all aspect of their life, e.g. health, education, culture and

custom, etc. Electrification also could be the tool to promote local economic development.

The project is economically and financially feasible and satisfies interest of the all

participants. This assures sustainable development of the new model in developing

renewable energy in Vietnam.

Investor certainly is the decisive factor for the success of the model. However, GOV, who

acts as market enabler and also participant, should actively participate in the market

assuring balance between interest of beneficiaries and having necessary measures to

promote the development model. Local resident, the main target of project, need to active

and positive participate in the development that is, surely, to maximize the turnover from

project and really meet their expectations.

83

The model absolutely could be extended to apply for other areas in Vietnam, where has

low electricity demand but is endowed with rich hydropower potential and economically to

connect to national grid.

More specific, it is recommended:

(i) The investment model could be extended to apply for other hydropower

projects in Vietnam.

(ii) Legal and institutional frame should be simplified and more efficient. Standard

criteria for approval need to be set up and published.

(iii) Standard Power Purchasing Agreement should be approved as soon as possible.

This will avoid lengthy and result-unknown negotiation between EVN and

developers.

(iv) Purchase tariff should be defined based on avoided cost (energy and capacity)

of EVN and balancing interests of SPP(s), EVN and other stakeholders.

(v) Promote measures on tax, financing and other support need to be provided from

GOV to the investment.

84

Bibliography

Bogach V. Susan (2000), Vietnam Renewable Energy Action Plan, Hanoi

Boie, Wulf. 2000. Hydropower for rural Electrification Seminar Document

Colonco, 2000, Technical Assistance for Preparation of Proposed Rural Energy Project, Hanoi

Construction Publish House (1999), Ordinance of Management of Investment and Construction, Regulations on promotion of investment and developments, Hanoi

Construction Publish House (2000), Vietnam regulation on cost estimation, Hanoi

Construction Publisher House (2001), Guiding documents for implementation of power investment, management and using, Hanoi

Entec AG (2000), Package C: Techno-Economic Assessment Model. Consultant Report To World Bank Washington, D.C

ESMAP (2000), Best Practice For Sustainable Development Of Micro Hydropower in Developing Countries, Washington, D.C

EVN (1999), Training workshop on “Small Hydropower Project for Rural Development”, Hanoi

EVN, IOE (1999), Master Plan Study in Rural Electrification, Hanoi

Harvey, Adam. 1998. Micro- Hydropower Design Manual

Hifab International AB (2000), Vietnam Rural Energy Study (final report), Hanoi

JICA (2001), Renewable Energy Master Plan for Northern Part, Hand out for Workshop in Hanoi.

K. Goldsmith (1995), The role of the private sector in the small-scale hydropower field, ST. Gallen

Meritec. August 2000. REAP Package E - Vietnam, Feasibility Study of a Program to Develop (and/or rehabilitate) Community Scale Hydro- Based Mini Grid, Final Draft, Hanoi

MOI, EVN (2001), Standard Agreement For Purchase of Electrical Energy From Small Power Producer (draft), Hanoi

MOI, WB, GEF (2002), Brief RARE Organization and Operational Manual, Hanoi

MOI, PECC1, ENTEC AG (2002), Micro Hydro Power Scheme for the Giap Trung Commune, Ha Giang Province (Draft report), Hanoi

85

Mostert, Wolfgang (2002), Design of Remote Area Renewable Electricity Fund, Inception Report. Hanoi

Natasha Pairaudeau (2002), Training Manual for Community Mobilization, Hanoi

National Political publish house (1999), Laws of Enterprises, Hanoi

PECC1, (2000), Feasibility Study of Na Loa Small Hydropower, Hanoi

PECC1, (2000), Feasibility Study of Keo Bac Small Hydropower, Hanoi

PECC1, (2000), Feasibility Study of Yadrang Small Hydropower, Hanoi

PECC1&ENTEC AG, (2000), Feasibility Study of Na Loa Small Hydropower, Hanoi

Rehling, Uwe (2000), Mini-grid Seminar Document, SESAM.

Robert Vermstom and Stephen Graham (1999), Financial and Economic Justification

Steven Ferrey (2002), Workshop presentation in Hanoi “ Small power Projects (SPPs)”, Hanoi

Tran Hai Anh (2002), Renewable Energy as an Option for Rural Electrification of “Quang Khe” Commune, “ Dak Lak” Province (Vietnam), Flensburg

Tran Hong Ky (2002), Purchasing Tariffs for Renewable Energy Small Power Plants in Vietnam, Term paper, Flensburg

Worley (1999), Vietnam Rural Energy Project, Volume 1, Hanoi

http://www. laodong.com.vn

http://www. vnexpress.net

Union Newspaper, Vietnam

86

APPENDIX 1

SURVEY DATA FOR GIAP TRUNG COMMUNE

87

HOUSEHOLD SURVEY DATA

General statistic: Giap Trung Names of villages

Total of hh

No. of poor hh

30% of poor hh

No. of middle hh.

30% of middle hh

No. of rich hh

30% of rich hh

Na Poong Khuoi Khung Lung Nhoa Na Po Thom khieu Khau Nhoa Phia booc Na Vieng

30 58 38 69 36 68 91 63

11 21 19 19 12 28 23 19

3 6 6 6 4 8 7 6

13 28 12 43 18 32 54 41

4 8 4 13 5 10 16 12

6 9 7 7 6 8 14 3

2 3 2 2 2 2 4 1

Questionnaire counted Names of villages

30% of poor hh

20% of asked questionnaires

30% of middle hh

20% of asked questionnaires

30% of rich hh

20% of asked questionares

Na Poong Khuoi Khung Lung Nhoa Na Po Thom khieu Khau Nhoa Phia booc Na Vieng

3 6 6 6 4 8 7 6

1 1 1 1 1 2 2 1

4 8 4 13 5 10 16 12

1 2 1 3 1 2 3 2

2 3 2 2 2 2 4 1

1 1 1 1 1 1 1 1

Total 10 15 8 33 Q1.5. Commune: Valid Count Percent Giap Trung 33 100 Total 33 100 Q1.6. Village: Valid Count Percent Na Poong 3 9.1 Khuoi Khung 4 12.1 Lung Nhoa 3 9.1 Na Po 5 15.1 Thom khieu 3 9.1 Khau Nhoa 5 15.1 Phia booc 6 18.2 Na Vieng 4 12.1 Total 33 100 Well-ranking Valid Count Percent Poor 10 30.3 Middle 15 45.5 Rich 8 24.2 Total 33 100

88

Household profile and socio-economic indicators Q2.2. Ethnicity: Valid Count Percent Tay 5 15.1 Dao 23 69.7 H’mong 5 15.1 Total 33 100 Q2.3. No. of people in household (total): Valid Count Percent 3 1 3.0 4 2 6.0 5 6 18.2 6 8 24.2 7 4 12.1 8 3 9.1 9 1 3.0 10 2 6.0 11 3 9.1 14 2 6.0 15 1 3.0 Total 33 100 Q2.4. Male adults 18 and over (number): Valid Count Percent 1 15 45.5 2 11 33.3 3 6 18.2 4 1 3.0 Total 33 100 Q2.5. Male children under 18 (number): Valid Count Percent 0 5 15.1 1 10 30.3 2 11 33.3 3 3 9.1 4 2 6.0 5 2 6.0 Total 33 100 Q2.6. Female adults 18 and over (number): Valid Count Percent 1 16 48.5 2 10 30.3 3 5 15.1 4 2 6.0 Total 33 100 Q2.7. Female children under 18 (number): Valid Count Percent 0 3 9.1 1 7 21.2 2 12 36.4 3 7 21.2 4 3 9.1 5 1 3.0 Total 33 100

89

Q2.8. Family’s main sources of income (list): Valid Count Percent From Agriculture 33 100 From Animal Breeding 16 48.6 Hired Working 3 9.1 Total 33 100 Q2.9. Yearly total income of household (in VND, estimate): Valid Count Percent 840000 1 3.0 890000 1 3.0 1140000 1 3.0 1400000 1 3.0 1800000 1 3.0 2250000 1 3.0 2850000 1 3.0 3500000 1 3.0 3560000 2 6.0 5000000 1 3.0 6000000 1 3.0 6350000 1 3.0 6850000 1 3.0 7100000 1 3.0 7500000 2 6.0 8230000 1 3.0 8620000 1 3.0 8700000 1 3.0 9000000 2 6.0 9100000 1 3.0 9820000 1 3.0 10000000 1 3.0 12000000 1 3.0 12300000 1 3.0 12700000 1 3.0 12850000 1 3.0 13500000 1 3.0 14300000 1 3.0 18250000 1 3.0 19000000 1 3.0 Total 33 100 Q2.10. How many hours a day to household members spend collecting firewood?: Valid Count Percent 0.5 1 3.0 1 8 24.2 1.5 3 9.1 2 19 57.6 3 1 3.0 4 1 3.0 Total 33 100 How many hours a day to household members spend collecting firewood by well-ranking: Well-ranking Average time (hours) Poor 1,5 Middle 1,83 Rich 1,94

90

Q2.11. Which household members usually do this work? Valid Count Percent Woman 33 100 Total 33 100 Q2.12. What activities do children usually engage in the evening after dark? Valid Count Percent Doing assignments 26 78.8 Have a rest 7 21.2 Total 33 100 Q2.13. What activities do men usually engage in the evenings after dark? Valid Count Percent Have a rest 33 100 Total 33 100 Q2.14. What activities do women usually engage in the evenings after dark? Valid Count Percent Have a rest 29 87.9 Doing Housework 4 12.1 Total 33 100 Existing fuel use Which types of fuel does your household currently use, for what purpose, and approximately how do you spend per month on each fuel? Q3.1. Does your household currently use kerosene? Valid Count Percent Yes 32 97.0 No 1 3.0 Total 33 100 Q3.1.1. Uses Valid Count Percent Lighting 32 100 Total 32 100 Q3.1.2. How much of this fuel do you use each month (litre)? Valid Count Percent 0.2 1 3.2 0.5 3 9.3 0.75 1 3.2 1 15 46.9 1.5 2 6.2 2 6 18.7 3 3 9.3 4 1 3.2 Total 32 100 Average kerosene use each month by well-ranking: Well-ranking Average kerosene Poor 1,32 Middle 1,589 Rich 1,25

91

Q3.1.3. How much do you spend on this fuel each month (VND)? Valid Count Percent 1.200 1 3.2 3.000 3 9.3 4.000 3 9.3 4.500 7 21.9 5.000 4 12.6 6.000 2 6.2 7.000 1 3.2 8.000 1 3.2 9.000 2 6.2 10.000 2 6.2 12.000 2 6.2 15.000 2 6.2 24.000 2 6.2 Total 32 100 Average payment each month by well-ranking: Well-ranking Average payment (VND) Poor 6.420 Middle 8.000 Rich 6.000 Q3.2. Does your household currently use Diesel? Valid Count Percent No 33 100 Total 33 100 Q3.3. Does your household currently use Gas (LPG)? Valid Count Percent No 33 100 Total 33 100 Q3.4. Does your household currently use Wood? Valid Count Percent Yes 33 100 Total 33 100 Q3.4.1. Uses Valid Count Percent Cooking 33 100 Total 33 100 Q3.4.2. How much of this fuel do you use each month (kg)? )?( Self- estimated) Valid Count Percent 120 2 6.0 125 1 3.0 150 2 6.0 180 4 12.1 190 1 3.0 200 1 3.0 300 6 18.2 360 1 3.0 400 5 15.1 450 2 6.0 500 5 15.1 600 2 6.0 800 1 3.0 Total 33 100

92

Average wood use each month by well-ranking: Well-ranking Average wood (kg) Poor 289,5 Middle 346,667 Rich 405,0 Q3.4.3. How much do you spend on this fuel each month (VND)?( Self- estimated) Valid Count Percent 60.000 2 6.1 65.000 1 3.0 75.000 1 3.0 80.000 1 3.0 90.000 4 12.1 100.000 2 6.1 150.000 4 12.1 160.000 2 6.1 180.000 1 3.0 200.000 5 15.1 225.000 2 6.1 250.000 5 15.1 300.000 2 6.1 400.000 1 3.0 Total 33 100 Average payment each month by well-ranking: Well-ranking Average payment (VND) Poor 145.500 Middle 175.000 Rich 202.500 Q3.5. Does your household currently use Straw? Valid Count Percent No 33 100 Total 33 100 Q3.6. Does your household currently use Husks? Valid Count Percent No 33 100 Total 33 100 Q3.7. Does your household currently use Coal briquette? Valid Count Percent No 33 100 Total 33 100 Q3.8. Does your household currently use Charcoal? Valid Count Percent No 33 100 Total 33 100 Q3.9. Does your household currently use Bio-mass (including gas from dung or dung itself)? Valid Count Percent No 33 100 Total 33 100

93

Other energy sources Does your household obtain energy from any of the following sources? Please provide details: Pico hydro systems Q4.1. Do you own or share the use of a pico hydro system? Valid Count Percent Own 14 42.4 Share 10 30.3 Do not use 9 27.3 Total 33 100 Well-ranking * Do you own or share the use of a pico hydro system? Crosstabulation Well-ranking Own Share Do not use Total Poor Count 3 3 4 10 % of Total 9.1% 9.1% 12.1% 30.3% Middle Count 7 5 3 15 % of Total 21.2% 15.2% 9.1% 45.5% Rich Count 4 2 2 8 % of Total 12.1% 6.1% 6.1% 24.2% Total Count 14 10 9 33 % of Total 42.4% 30.3% 27.3% 100.0% Q4.2. If you share, how many households do you share with? (number): Valid Count Percent 1 2 20.0 2 7 70.0 3 1 10.0 Total 10 100 Q4.3. What is the capacity of the system? (W) Valid Count Percent 300 14 58.3 600 9 37.5 1000 1 4.17 Total 24 100 Q4.4. How many light bulbs does it provide for in your house? Valid Count Percent 2 1 7.14 3 9 64.3 4 3 21.4 6 1 7.14 Total 14 100 Q4.5. If shared, how many light bulbs does it run in total?: Valid Count Percent 2 4 40.0 3 1 10.0 4 3 30.0 5 1 10.0 9 1 10.0 Total 10 100

94

Q4.6. What was the cost to your hh of purchase (VND)? Valid Count Percent 250.000 1 7.14 300.000 4 28.5 330.000 1 7.14 350.000 2 14.3 360.000 1 7.14 380.000 1 7.14 400.000 2 14.3 700.000 2 14.3 Total 14 100 If own, average purchase by well-ranking: Well-ranking Average purchase (VND) Poor 300.000 Middle 460.000 Rich 325.000 Q4.7. If shared, what was the total cost of purchase (VND)?: Valid Count Percent 100.000 1 10.0 280.000 1 10.0 300.000 2 20.0 380.000 4 40.0 500.000 1 10.0 600.000 1 10.0 Total 10 100 Average payment each month by well-ranking: Well-ranking Average payment (VND) Poor 360.000 Middle 368.000 Rich 340.000 Q4.8. What was the cost to your hh of installation (VND)?: Valid Count Percent 9.000 1 7.14 15.000 3 21.4 20.000 1 7.14 25.000 1 7.14 30.000 1 7.14 50.000 1 7.14 85.000 1 7.14 90.000 1 7.14 100.000 1 7.14 140.000 1 7.14 200.000 1 7.14 300.000 1 7.14 Total 14 100 If own, average installation by well-ranking: Well-ranking Average installation (VND) Poor 81.666,67 Middle 44.142,86 Rich 135.000

95

Q4.9. If shared, what was the total cost of installation?: Valid Count Percent 15.000 2 20.0 30.000 1 10.0 50.000 2 20.0 60.000 1 10.0 100.000 1 10.0 160.000 1 10.0 180.000 1 10.0 300.000 1 10.0 Total 10 100 If shared, average installation by well-ranking: Well-ranking Average installation (VND) Poor 180.000 Middle 54.000 Rich 75.000 Q4.10. What is the cost to your hh of monthly maintenance (VND)? Valid Count Percent 3.000 2 14.3 5.000 4 28.6 10.000 5 35.7 18.000 3 21.4 Total 14 100 If own, average maintenance by well-ranking: Well-ranking Average maintenance (VND) Poor 8.333,33 Middle 9.571,43 Rich 9.500 Q4.11. If shared, what is the total cost of monthly maintenance (VND)? Valid Count Percent 5.000 2 20.0 10.000 3 30.0 13.000 1 10.0 18.000 1 10.0 20.000 1 10.0 25.000 1 10.0 40.000 1 10.0 Total 10 100 If shared, average maintenance by well-ranking: Well-ranking Average maintenance (VND) Poor 13.333,33 Middle 17.000 Rich 15.500 Q4.12. How many hours a day do you use the pico hydro system?: Valid Count Percent 6 4 16.7 24 20 83.3 Total 24 100

96

Car or motorcycle batteries: Q5.1. Do you own a car or motorcycle battery for power? Valid Count Percent No 33 100 Total 33 100 Small generators set (Diesel powered Genset) Q6.1. Do you own a Genset? Valid Count Percent No 33 100 Total 33 100 Candles Q7.1. How many candles does your household use each day? Valid Count Percent Do not use 33 100 Total 33 100 Dry cell batteries Q8.1. How many dry cell batteries do you use? (count up total in all appliances in household) Valid Count Percent 2 24 72.7 3 1 3.0 6 1 3.0 Do not use 7 21.2 Total 33 100 Q8.2. How many batteries do you use per month?: Valid Count Percent 2 5 19.2 4 14 53.8 6 6 23.1 12 1 3.8 Total 26 100 Average dry cell batteries by well-ranking: Well-ranking Average dry cell batteries (VND) Poor 3,5 Middle 4,67 Rich 5,0 Q8.3. Cost per month (VND)?: Valid Count Percent 2.500 5 19.2 5.000 14 53.8 7.500 6 23.1 15.000 1 19.2 Total 26 100 Average payment by well-ranking: Well-ranking Average payment (VND) Poor 4.375 Middle 5.833,33 Rich 6.250

97

Powered machinery and appliances: Please indicate which (and how many) of the following appliances and machines your households owns and how they are powered. Q9.1. Number of light bulb Valid Count Percent 0 10 30.3 1 5 15.2 2 15 45.4 3 2 6.1 4 1 3.0 Total 33 100 Q9.1.1. Powered by… Valid Count Percent Pico 23 100 Total 23 100 Q9.2. Number of Fluorescent tube Valid Count Percent 0 9 21.2 1 15 45.5 2 9 27.3 Total 33 100 Q9.2.1. Powered by… Valid Count Percent Pico 24 100 Total 24 100 Q9.3. Number of Colour TV Valid Count Percent 0 33 100 Total 33 100 Q9.4. Number of Black and white TV Valid Count Percent 0 24 72.7 1 9 27.3 Total 33 100 Q9.4.1. Powered by… Valid Count Percent Pico 9 100 Total 9 100 Q9.5. Number of Radio/cassette/cd players Valid Count Percent 0 12 71.4 1 21 28.6 Total 33 100 Q9.5.1. Powered by… Valid Count Percent Pico 10 47.6 Battery 11 52.4 Total 21 100

98

Q9.6. Number of Karaoke player Valid Count Percent 0 33 100 Total 33 100 Q9.7. Number of Video recorder Valid Count Percent 0 33 100 Total 33 100 Q9.8. Number of Electric fan Valid Count Percent 0 27 81.8 1 6 18.2 Total 33 100 Q9.8.1. Powered by… Valid Count Percent Pico 6 100 Total 6 100 Q9.9. Number of Refrigerator Valid Count Percent 0 33 100 Total 33 100 Q9.10. Number of Pressurized lamp Valid Count Percent 0 33 100 Total 33 100 Q9.11. Number of Water pump Valid Count Percent 0 33 100 Total 33 100 Q9.12. Number of Electric kettle Valid Count Percent 0 33 85.7 Total 33 100 Q9.13. Number of Rice mill/ husker Valid Count Percent 0 33 100 Total 33 100 Q9.14. Number of Rice cooker Valid Count Percent 0 33 100 Total 21 100 Q9.15. Number of Crop dryer Valid Count Percent 0 33 100 Total 33 100

99

Productive uses Which of the following activities does your household engage in? Q10.1. Does your household engage in rice milling/ husking? Valid Count Percent Yes 33 100 Total 33 100 Q10.1.1. Source of energy? (if any) Valid Count Percent Diezel 5 15.1 By hands and feet 28 84.9 Total 33 100 Q10.1.2. How often does the household engage in this activity (per month?) Valid Count Percent 1 13 39.4 2 9 27.3 3 11 33.3 Total 33 100 Q10.1.3. Would you consider converting existing machinery to hydro power or beginning to use electricity for this activity? Valid Count Percent Yes 33 100 Total 33 100 Q10.2. Does your household engage in welding/mechanical repairs? Valid Count Percent No 33 100 Total 33 100 Q10.3. Does your household engage in Wood working/furniture making? Valid Count Percent No 33 100 Total 33 100 Q10.4. Does your household engage in Sewing/weaving/tailoring? Valid Count Percent No 33 100 Total 33 100 Q10.5. Does your household engage in Electronic equipment repairs? Valid Count Percent No 33 100 Total 33 100 Q10.6. Does your household engage in Alcohol making? Valid Count Percent Yes 3 9.1 No 30 90.9 Total 33 100 Q10.6.1. Source of energy? (if any) Valid Count Percent Wood 3 100 Total 3 100

100

Q10.6.2. How often does the household engage in this activity (per month)? Valid Count Percent 1 3 100 Total 3 100 Q10.6.3. Would you consider converting existing machinery to hydro power or beginning to use electricity for this activity? Valid Count Percent No 3 100 Total 3 100 Q10.7. Does your household engage in Chicken hatching/rearing? Valid Count Percent No 33 100 Total 33 100 Q10.8. Does your household engage in Pumping - irrigation? Valid Count Percent No 33 100 Total 33 100 Q10.9. Does your household engage in Pumping – water supply? Valid Count Percent No 33 100 Total 33 100 Q10.10. Does your household engage in Entertainment Valid Count Percent No 33 100 Total 33 100 Expected use: Q11.1. If a mini hydro system is constructed in your commune what would you expect your electricity use pattern to be? Valid Count Percent Use evenings only 16 48.5 Use both daylight and evening hours 17 51.5 Total 33 100 Well-ranking * If a mini hydro system is constructed in your commune what would you expect your electricity use pattern to be * Cross tabulation Well-ranking Use evenings only use both daylight and evening hours Total Poor Count 8 2 10 % of Total 24.2% 6.1% 30.3% Middle Count 8 7 15 % of Total 24.2% 21.2% 45.5% Rich Count 8 8 % of Total 24.2% 24.2% Total Count 16 17 33 % of Total 48.5% 51.5% 100.0% Q11.2. If you connect to electricity would you consider starting other income generating activities which use electricity? Which ones? Valid Count Percent Do not know 33 90.5 Total 33 100 Q11.3. If you connect to electricity, which activities in your household will progress? Valid Count Percent Do not know 33 90.5 Total 33 100

101

DATA SURVEY FOR PRODUCTIVE USE 1. Rice husker

Name Power Monthly diesel consumption (lit) Total

Convert to using electricity (Yes/No)

If Yes, when (year from present)

Cost for convert (a, b or c)

Signature

T 1 T 2 T 3 T 4 T 5 T 6 T 7 T 8 T 9 T 10 T 11 T 12 Husker

I. Na Po village 1. Hoang Van Ngam 12 KW 40 40 40 40 40 40 40 40 40 40 40 40 480 Don’t know 2. Duong Van Khang 12KW 20 20 20 20 20 20 20 20 20 20 20 20 240 Don’t know II. Khau Nhoa village 1. Trieu Van Sinh 12 KW 35 35 35 35 35 35 35 35 35 35 35 35 420 Yes 1 b 2. Hoang Van San 12KW 20 20 20 20 20 20 20 20 20 20 20 20 240 Don’t know 3.Bon Van Niem 12KW 30 30 30 30 30 30 30 30 30 30 30 30 360 Don’t know 4. Bon Van Lanh 12KW 20 20 20 20 20 20 20 20 20 20 20 20 240 No III. Na Vieng village 1.Bon Van Noi 12 KW 40 40 40 40 40 40 40 40 40 40 40 40 480 Don’t know 2. Bon Van Chan 12 KW 20 20 20 20 20 20 20 20 20 20 20 20 240 Don’t know 3. Dang Van Pinh 12 KW 30 30 30 30 30 30 30 30 30 30 30 30 360 Don’t know IV Phia Booc village 1.Truong Duc Can 12 KW 20 20 20 20 20 20 20 20 20 20 20 20 240 Don’t know 2. Dang Giao Hung 12KW 20 20 20 20 20 20 20 20 20 20 20 20 240 Don’t know 3.Bong Van Kien 12KW 30 30 30 30 30 30 30 30 30 30 30 30 360 Don’t know 4. Trieu Quang Hung 12 KW 15 15 15 15 15 15 15 15 15 15 15 15 180 Don’t know 5. Truong Ngoc Tuan 8KW 15 15 15 15 15 15 15 15 15 15 15 15 180 Yes 1 b Cost for converting a – Cash available b – from selling pigs/ Pico/ diesel genset c – Borrow d –Can not afford

102

2. Giap Trung Commune Clinic Item Power (w) Number Daily using Lamp 100 30 10 60 6 10 40 8 10 Autoclave 2000 Fan 80 12 Refrigerator 85 1

3. Giap Trung secondary school Item Power (w) Number Daily using Lamp 60 110 8 40 32 8 25 16 8 Fan 80 45 Refrigerator 85 2

4. Commune Office Item Power (w) Number Daily using Lamp 100 10 6 60 18 8 40 10 8 Fan 80 12 Refrigerator 85 1

5. Shops and services Name of owner Do you intend lighting

during day time after electrified (Yea/No)

Do you intend use fans during day time after electrified (Yea/No)

Refrigerator (Yea/No)

set Daily use set Daily use Nguyen Nhu Hoa N 2 40 6 N 2 40 4 Y Le Hong Thai Y 2 40 6 Y 2 40 6 Y Nong Thi Thiet Y 3 40 6 Y 3 40 4 Y Nguyen Duc Nguyen Y 2 40 6 Y 2 40 6 Y 6. Other potential for productive use (According to interview with the commune leaders) Water supply: No Wood processing Name of owner

Lighting daytime Using power-saw during day time

Using power-planer during day time

Y/N

Set Power (W)

Daily use

Y/N

Set Power (W)

Daily use

Y/N

Set Power (W)

Daily use

Trac Van Trai

Y 4 60 8 Y 2 7500 3 Y 2 1500 3

Sam Van Lam

Y 6 60 8 Y 3 5500 3 Y 3 1500 3

Mechanical repair : Yes Shops Demand to increase shops: Yes

Number of additional shops in next 5 year: 7 Food service Demand to increase food service: Yes Number of additional food service in next 5 year: 8 Market: No Others 1. Tofu making 2. Recharging batteries 3. Sawing shops

103

APPENDIX 2

LOAD ESTIMATION FOR GIAP TRUNG COMMUNE

104

Electricity demand for public/service use

Customer Power

(W)

Monthly consumption

(kWh)

Yearly consumption

(kWh) Consumption time District’s General heath clinic 2585 277 3329 whole dayGiap Trung school 2340 247 2967 whole dayGiap Trung Commune Office 1410 166 1994 whole dayShops and Services 840 104 1248 whole day Sum 7175 795 9538

Customers Power Unit daily using time Monthly consumption (W) (hours) (kWh) District’s General heath clinic Office lighting 150.0 6 3 82Patient room lighting 80.0 3 4.5 33Employee room lighting 100.0 3 4.5 41Protection lighting 100.0 1 6 18Fan for office 80.0 6 3 44Fan for employee and patient 80.0 6 3 44Refrigerator 85.0 1 6 16Sum 277 Giap Trung school Power Unit daily using time Monthly consumption (W) (hours) (kWh) Class room lighting 80.0 8 3 58Office lighting 100.0 3 2 18Living room for pupil 80.0 3 4.5 33Living room for teacher 100.0 5 4.5 68Protect light 100.0 1 6 18Fan for office 80.0 3 3 22Fan for living room 40 8 3 29Sum 247 Giap Trung Commune Office Power Unit daily using time Monthly consumption (W) (hours) (kWh) Office lighting 100.0 8 3.5 85Staff lighting 100.0 2 4.5 27Protection lighting 80.0 1 6 15Radio 80.0 2 3.5 17TV 85.0 1 2.5 6Refrigerator 85.0 1 6 16Sum 166 Shops and Services Power Unit daily using time Monthly consumption (W) (hours) (kWh) Bulb 3 40.0 9 4 44Fan 1 40.0 9 3.5 38Refrigerator 60.0 2 6 22Sum 104

105

Electricity demand for public/service use

De-husking machine

Item Monthly

consumption Yearly

consumption

(kWh) (kWh)

Diesel

Diesel consumption 4620

Energy consumption 46534

Efficiency 20%

Electrical motor

Efficiency 75%

Total electricity demand 12409

Realistic 40%

Real electricity demand 414 4964

Wood Processing

Item Power Unit Time of

using Monthly

consumption Yearly

consumption

(W) Hour (kWh) (kWh)

Power-saw 5000 5 2.5 1901 22812.5

Planer 1500 5 3 684 8213

Bulb 60 10 5 91 1095

Sum 2677 32120

Total productive use demand 3090 37084

106

APPENDIX 3

TECHNICAL DESIGN

107

Monthly Runoff at Giap Trung Site

Year I II III IV V VI VII VIII IX X XI XII

1964 0.18 0.14 0.18 0.27 0.35 3.69 3.49 2.82 1.75 1.21 0.47 0.37

1965 0.26 0.2 0.16 0.3 0.97 1.8 2.46 1.63 0.66 0.81 0.82 0.38

1966 0.29 0.22 0.18 0.16 0.48 3.42 4.9 1.92 0.78 0.38 0.27 0.2

1967 0.16 0.13 0.11 0.24 1.67 1.55 1.94 3.22 1.78 0.94 0.41 0.28

1968 0.21 0.17 0.14 0.13 1.35 1.74 3.65 3.34 1.61 0.63 0.55 0.31

1969 0.23 0.18 0.15 0.13 0.27 1.4 2.85 3.78 1.31 0.65 0.35 0.24

1970 0.18 0.14 0.11 0.17 0.43 1.39 4.54 2.05 0.91 0.37 0.25 0.18

1971 0.14 0.12 0.1 0.09 0.31 2.56 3.31 5.55 2.34 0.84 0.35 0.34

1972 0.23 0.17 0.13 0.11 1.44 1.34 2.19 3.2 1.21 0.77 0.42 0.28

1973 0.21 0.16 0.32 0.53 1.86 3.54 3.9 1.92 1.4 0.56 0.32 0.24

1974 0.23 0.18 0.15 0.25 1.79 2.05 3.39 1.35 1.91 1.04 0.58 0.32

1975 0.25 0.2 0.16 0.26 3.85 3.46 1.59 0.7 0.49 0.33 0.27 0.2

1976 0.16 0.22 0.16 0.19 3.14 1.97 2.78 1.91 1.11 1.4 0.53 0.31

1977 0.22 0.18 0.15 0.21 0.35 0.93 1.97 1.38 0.8 1.84 0.67 0.33

1978 0.24 0.19 0.15 0.21 2.84 3.21 1.81 2.79 1.56 1.05 0.79 0.38

1979 0.27 0.33 0.24 0.28 0.53 2.9 3.97 2.79 1.82 0.69 0.35 0.26

1980 0.2 0.17 0.15 0.28 0.77 0.6 2.65 2.61 1.37 0.81 0.36 0.26

1981 0.21 0.17 0.41 0.54 1.06 1.61 2.55 1.46 1.35 1.36 0.76 0.39

1982 0.28 0.22 0.19 0.17 0.7 1.47 2.5 3.03 1.82 0.68 0.54 0.32

1983 0.24 0.19 0.16 0.23 1.39 1.01 2.08 2.16 1.53 0.92 0.69 0.35

1984 0.26 0.2 0.17 0.15 0.4 1.47 1.43 2.07 1.02 0.59 0.32 0.23

1985 0.18 0.15 0.16 0.26 0.65 1.36 1.41 3.04 1.53 0.59 0.68 0.34

1986 0.24 0.19 0.16 0.61 1.49 2.63 2.66 2.02 2 0.85 0.39 0.28

1987 0.22 0.18 0.15 0.13 2.07 1.25 1.23 2.09 1.18 1.16 0.6 0.33

1988 0.24 0.19 0.16 0.14 0.98 1.71 2.74 2.14 1.11 0.6 0.32 0.24

1989 0.22 0.17 0.14 0.12 0.4 3.3 2.29 1.54 0.61 0.36 0.25 0.18

1990 0.14 0.19 0.97 0.62 0.88 2.2 3.66 1.56 1.15 0.6 0.38 0.27

1991 0.21 0.17 0.39 0.27 0.39 1.71 1.61 2.29 1.02 0.4 0.31 0.33

1992 0.24 0.24 0.18 0.14 1.43 2.69 2.05 0.68 0.79 0.35 0.24 0.23

1993 0.22 0.32 0.22 0.21 0.35 2.11 2.88 1.63 1.75 0.62 0.32 0.23

1994 0.17 0.14 0.14 0.12 1.53 1.72 1.96 1.44 0.9 0.84 0.4 0.48

1995 0.3 0.22 0.17 0.14 0.37 2.66 2.84 2.62 1.26 0.47 0.29 0.22

1996 0.17 0.14 0.41 0.27 0.62 2.15 2.51 2.21 1.01 0.62 0.35 0.25

1997 0.2 0.16 0.31 0.78 0.43 2.23 2.26 2.29 1.15 0.96 0.41 0.29

1998 0.22 0.18 0.18 0.34 0.64 2.8 3.67 2.16 0.97 0.4 0.28 0.21

1999 0.17 0.14 0.12 0.17 0.35 0.53 2.23 3.61 1.55 0.78 0.4 0.27

2000 0.2 0.15 0.12 0.1 0.25 1.25 1.69 1.12 0.84 1.09 0.41 0.28

2001 0.2 0.2 0.23 0.25 0.81 1.15 3.37 2.32 0.81 0.75 0.43 0.29

Mean 0.216 0.184 0.207 0.252 1.042 2.015 2.658 2.275 1.267 0.771 0.435 0.287

108

Head Loss Calculation for Giap Trung Hydropower

Assumptions

gross H = 68.0 m

Rated Q = 0.6 m3/s

L horizontal = 40.0 m

Material = Steal

d = 0.45 m

l = 78.9 m

A = 0.159 m^2

k = 1.5 mm

k/d = 3.333 mm/mm

ξ [local] = 0.027 -

K valve+Kbend+Kentrence = 1.2

Q exceed. v h [local] h [friction] h [total]

l/s % m/s m m m

0.01 100% 0.06 0.001 0.000 0.001

0.03 90% 0.19 0.008 0.002 0.010

0.07 80% 0.44 0.045 0.012 0.057

0.12 70% 0.75 0.133 0.035 0.168

0.20 60% 1.26 0.369 0.097 0.466

0.31 50% 1.95 0.887 0.233 1.120

0.58 40% 3.65 3.107 0.814 3.921

1.01 30% 6.35 9.420 2.469 11.889

1.43 20% 9.00 18.884 4.950 23.834

2.10 10% 13.21 40.725 10.674 51.399

2.60 5% 16.36 62.427 16.362 78.789

109

Cost Estimation for Giap Trung Hydropower

Technical Parameters Qd = 600 l/s

Pel = 244 kW

No. Item / Specification Unit Quantity Rate Total

Summary rounded figuresA Civil Works

1,813,508,000B Electro-mechanical Equipment

2,025,200,000C Transmission Lines

5,039,200,000D Land Acquisition

15,000,000E Project Planning, Engineering Design, Site Supervision

and Administration 395,000,000G Contingencies

718,547,000 Total Project Cost (VND) 10,006,455,000 Total Project Cost (USD) 649,770 Unit Project Cost (USD/kW) 2,663 Unit hydropower Cost (USD/kW) 1,322

A Civil Works Section 1: Preliminary and General

1.1 Mobilisation / Demobilisation

Allow for mobilisation of all personnel, plant and equipment to the project site and the initial establishment on the project site, including associated preliminary costs.

Allow for demobilisation of all personnel, plant, equipment and materials, etc. from the project site on completion, including clean-up of site and restoration of contractor's establishment areas.

- - lump sum 30,000,000

1.2 Maintain Construction Establishment

Allow to maintain construction establishment for the whole project duration, including storage sheds for materials and plant, site office, accommodation for personnel as well as setting out all the work. Month 12.0 10,000,000 120,000,000

Note: site supervision, and all head office associated charges to be included in all-in labour rates and the unit rate mark-up.

1.3 Insurance

Allow for insurance premiums (other than workers' compensation insurance), security deposits / bond and retention moneys - - lump sum 100,000,000

Note: workers' compensation to be included in all-in labour rates

Total Section 1 (carried forward to Summary Part A) 250,000,000 Section 2: Intake Works

2.1 Site clearance at intake m2 100.0 4,500 450,000

110

2.2 Temporary coffer dam as required for construction of intake works (incl. pumping if required and removal of dam on completion)

- - lump sum 15,000,000

2.3 Excavation in rock and boulders to form intake works including preparation of excavated surface for fill or concrete and backfill (measurement: solid volume) m3 70.0 90,000 6,300,000

2.4 Loading, transporting and disposal of surplus material from

intake excavation (measurement: excavated material) m3 91.0 8,000 728,000

2.5 Supply, place, compact and cure high grade concrete in slabs, piers and walls of intake structure m3 25.0 1,000,000 25,000,000

2.6 Supply, fix and remove formwork to slabs, piers and walls of

intake structure (all surfaces: planar, inclined and sloping) Allow for triangular ledge at all exposed edges m2 120.0 120,000 14,400,000

2.7 Supply and fix reinforcing bars in intake structure kg 3000.0 9,000 27,000,000

2.8 Supply, place, compact and cure cyclopean concrete in weir body m3 35.0 700,000 24,500,000

2.9 Supply, place, compact and cure high grade concrete in weir m3 17.0 1,000,000 17,000,000

2.10 Supply, fix and remove formwork to weir (all surfaces: planar,

inclined and sloping) Allow for triangular ledge at all exposed edges m2 80.0 120,000 9,600,000

2.11 Supply and fix reinforcing bars in weir kg 2040.0 9,000 18,360,000

2.12 Stone masonry for intake structures (mortar 1:4) m3 45.0 750,000 33,750,000

2.13 Rendering / pointing stone masonry structures (mortar 1:5) m2 100.0 23,000 2,300,000

2.14 Supply and install sluice gate, 1.2 x 2.0 m, t = 10 mm, incl. corrosion protection kg 400.0 17,000 6,800,000

2.15 Supply and install sliding gate at intake canal, 1.2 x 1.55 m, t

= 8 mm, incl. corrosion protection kg 230.0 17,000 3,910,000 Total Section 2 (carried forward to Summary Part A) 205,098,000 Section 3: Sand trap [L=30m, b=2m)

3.1 Site clearance in sand trap area m2 120.0 4,500 540,000

3.2 Excavation in all materials (excl. rock and boulders) to form sand trap structure including backfill (measurement: solid volume) m3 20.0 30,000 600,000

3.3 Excavation in rock and boulders to form sand trap structure

including backfill (measurement: solid volume) m3 20.0 90,000 1,800,000

3.4 Loading, transporting and disposal of surplus material from sand trap excavation (measurement: excavated material) m3 48.0 7,500 360,000

111

3.5 Stone masonry for sand trap (mortar 1:4) m3 200.0 600,000 120,000,000

3.6 Rendering / pointing stone masonry structures (mortar 1:5) m2 180.0 23,000 4,140,000

3.7 Supply, place, compact and cure concrete grade K225 in

operating platforms and piers for gate installation m3 3.0 1,000,000 3,000,000

3.8 Supply, fix and remove formwork to operating platforms and piers (all surfaces: planar, inclined and sloping)

Allow for triangular ledge at all exposed edges m2 20.0 120,000 2,400,000


3.10 Supply and install sluice gate at sand trap, 0.9 x 0.9 m, t=8mm, incl. corrosion protection kg 90.0 17,000 1,530,000

3.11 Supply and install slide gate at headrace pipe taking off from

sand trap, 0.7 x 0.6 m, t=8mm, incl. corrosion protection kg 90.0 17,000 1,530,000

3.12 Metal work for trash racks, steel strips 4 x 60 mm, 1.8 x 2.0 m (surface treatment: 2 coats zinc rich primer; 3 coats tar epoxy resin for finishing) kg 300.0 17,000 5,100,000

Total Section 3: (carried forward to Summary Part A) 143,250,000 Section 4: Headrace (L~=7100 m)

4.1 Site clearance along headrace route m2 1100.0 5,000 5,500,000

4.2 Excavation in all materials (excl. rock and boulders) for headrace canal (measurement: solid volume), incl. backfill m3 1600.0 30,000 48,000,000

4.4 Excavation in rock and boulders for headrace canal

(measurement: solid volume), incl. backfill m3 55.0 90,000 4,950,000

4.5 Loading, transporting and disposal of surplus material from headrace excavation (measurement: excavated material) m3 1986.0 7,000 13,902,000

4.6 Stone masonry for headrace canal, incl. spillways (mortar 1:4)

m3 1207.0 600,000 724,200,000

4.7 Pointing stone masonry structures (mortar 1:5) m2 6035.0 7,000 42,245,000

4.8 Supply, place, compact and cure concrete for drainage crossings etc. m3 7.0 1,000,000 7,000,000

4.9 Supply, fix and remove formwork

Allow for triangular ledge at all exposed edges m2 23.3 120,000 2,797,200

4.10 Supply and fix reinforcing bars kg 560.0 9,000 5,040,000 Total Section 4 (carried forward to Summary Part A) 853,634,200 Section 5: Forebay

112

5.1 Site clearance in pond area m2 50.0 4,500 225,000

5.2 Excavation in all materials (incl. rock and boulders), using heavy equipment to form head pond and fore bay structure (measurement: solid volume) m3 35.0 60,000 2,100,000

5.3 Loading, transporting and disposal of surplus material from

sand trap and fore bay excavation (measurement: excavated material) m3 42.0 7,000 294,000

5.4 Stone masonry for lining and embankment (mortar 1:4) m3 25.0 600,000 15,000,000

5.5 Rendering floor and top of stone masonry lining in storage

pond, thickness 15 mm (mortar 1:2) m2 20.0 15,000 300,000

5.6 Supply, place, compact and cure concrete grade K125 in operating platforms and piers for rack installation m3 2.0 1,000,000 2,000,000

5.7 Supply, fix and remove formwork to operating platforms and

piers (all surfaces: planar, inclined and sloping) Allow for triangular ledge at all exposed edges m2 5.3 120,000 640,800


5.9 Metal work for trash rack (surface treatment: 2 coats zinc rich primer; 3 coats tar epoxy resin for finishing) kg 800.0 17,556 14,044,800

5.10 Supply and install rungs to fore bay and sand trap walls, hot-

dip galvanised no. 5.0 77,000 385,000 Total Section 5: (carried forward to Summary Part A) 36,789,600 Section 6: Spillway (length approx. 40m)

6.10 Site clearance in spillway area m2 80.0 4,500 360,000

6.2 Excavation in all materials (incl. rock and boulders) to form spillway channel including backfill (measurement: solid volume) m3 100.0 15,000 1,500,000

6.3 Disposal of surplus material from spillway (measurement:

excavated material) m3 80.0 7,000 560,000

6.4 Stone masonry for spillway channel (mortar 1:3) m3 75.0 600,000 45,000,000

6.5 Rendering / pointing stone masonry structures, thickness 15 mm m2 250.0 15,000 3,750,000

6.7 Supply and install sliding gate for waste way (end of headrace

/ beginning of spillway collection channel); width 0.40 m; height of gate leaf 1.30 m; frame height 2.20 m; incl. Corrosion protection

kg 70.0 17,000 1,190,000 Total Section 6: (carried forward to Summary Part A) 52,360,000 Section 7: Penstock

113

7.1 Site clearance along penstock route m2 100.0 5,000 500,000

7.2 Excavation in all materials (incl. rock and boulders) to form a

trench for the penstock pipe and the associated anchor blocks.

m3 50.0 30,000 1,500,000

7.3 Disposal of surplus material from penstock excavation (measurement: excavated material) m3 60.0 15,000 900,000

7.4 Supply and install rolled welded steel pipes internal diameter

450 mm, wall thickness 4.0 mm, welded on site, mass = 85 kg/m m 74.0 800,000 59,200,000

7.5 Flanges

welded on pipe ends of dia. 450 mm with conical reduction to suit valve DN 500, PN 10 no. 2.0 300,000 600,000

7.6 Puddle flanges welded onto pipes of item 7.4, at fore bay and

anchor blocks, dia pipe 570 mm; OD 670 mm no. 5.0 120,000 600,000

7.7 Mitre steel bends (for on-site welding) dia. 450 mm, approx. 30°, t = 4 mm no. 1.0 1,000,000 1,000,000

7.8 Socket for by-pass, welded onto flanged pipe of item 7.5; 2" (DN 50), threaded (female) to suit galvanised steel by-pass pipes no. 1.0 150,000 150,000

7.9 Blank flange dia. 450 mm, PN 10, with two tapings BSP 1"

(for pressure testing) no. 2.0 650,000 1,300,000

7.10 Expansion joint dia.450 mm, PN 6 no. 1.0 3,000,000 3,000,000

7.11 Straub (or Viking Johnson) Coupling for steel pipes dia. 450 mm to provide a dismantling joint for valves no. 1.0 3,100,000 3,100,000

7.12 Supply and install breather pipe at fore bay, steel pipe DN 100,

t = 3.6 mm, 7.00 m long with 90° bend, welded to penstock on site no. 1.0 1,000,000 1,000,000

7.13 Supply and install a butterfly valve DN 500, PN 10 at fore bay

and at the powerhouse, with hand wheel and reduction gear

no. 1.0 30,000,000 30,000,000

7.14 Supply, place, compact and cure medium grade concrete in penstock anchor blocks m3 18.0 1,000,000 18,000,000

7.15 Supply, fix and remove formwork to anchor blocks, allow for

triangular ledge at exposed edges. m2 36.0 120,000 4,320,000

7.16 Reinforcing bars in anchor and thrust blocks kg 1080.0 9,000 9,720,000

7.17 Stone masonry for saddles, supports and slope protection including stairs using river stones or cleaned stones from excavation (mortar: 1 PC : 4 sand) m3 35.0 600,000 21,000,000

114

7.18 Stone masonry for drainage channel along penstock route (mortar 1:3) m3 20.0 650,000 13,000,000

7.19 Rendering / pointing stone masonry structures (stairs, drainage

channel) m2 120.0 23,000 2,760,000

7.20 Galvanised steelwork for penstock holding-down straps / bolts kg 30.0 20,000 600,000

Total Section 7: (carried forward to Summary Part A) 172,250,000 Section 8: Powerhouse and tailrace

8.1 Site clearance around powerhouse and tailrace area m2 100.0 4,500 450,000

8.2 Excavation in all materials (incl. rock and boulders) to form powerhouse foundation and tailrace structure including backfill and disposal of surplus material m3 35.0 60,000 2,100,000

8.3 Supply and install subsoil drainage works consisting of

perforated pipes dia. 100 mm, drainage aggregate (0 - 30 mm, approx. 0.1 m3/m), geofabrics min 180 g/m2 to wrap aggregate, and all pipe fittings such as bends and tees.

m 30.0 150,000 4,500,000

8.4 Stone masonry for tailrace structure (mortar 1:3) m3 50.0 650,000 32,500,000

8.5 Rendering of tailrace structure m2 100.0 15,000 1,500,000

8.6 Stone masonry for powerhouse footing (mortar 1:4) m3 6.0 600,000 3,600,000

8.7 Blinding and filling concrete, 1 PC : 8 aggregate m3 4.0 450,000 1,800,000

8.8 Supply, place, compact and cure high grade concrete in powerhouse floor above the tail race and parapet and ring beam (anchor block included in Section 6 above) m3 4.0 1,000,000 4,000,000

8.9 Supply, fix and remove formwork to powerhouse sub-

structure, allow for triangular ledge at exposed edges. m2 5.2 120,000 624,000

8.10 Reinforcing bars in powerhouse structure (deformed bars) kg 400.0 9,000 3,600,000

8.11 Brick wall in powerhouse superstructure (mortar 1:3), max. Height 2.70 m m2 60.0 90,000 5,400,000

8.12 Rendering / plastering of brick wall in powerhouse m2 400.0 15,000 6,000,000

8.13 Framed, ledged and braced sliding door (steel): w = 2 x 0.90

m, h = 2.50 m no. 1.0 4,600,000 4,600,000

8.14 Louver windows with timber frames b = 0.60, h = 1.00 m no. 3.0 350,000 1,050,000

8.15 Roof truss made from single angle bars, double pitch, span 6 m, truss spacing 2.80 m; incl. Corrosion protection kg 261.0 10,000 2,610,000

8.16 Purloins and bracings from angle bars kg 320.0 10,000 3,200,000

115

8.17 Corrugated Zincalum m2 37.0 70,000 2,590,000

8.18 Stone masonry structures for transformer platform, hard stand, tailrace (mortar: 1 PC to 4 sand) m3 3.5 600,000 2,100,000

8.19 Rendering of stone masonry of transformer platform, hard

stand, etc. m2 6.0 7,000 42,000

8.20 Supply, place, compact and cure secondary high grade concrete in plinth of turbine-generator unit, incl. formwork and rebar m3 2.9 1,000,000 2,900,000

8.21 Supply and drive copper earthling rods (heavy duty, dia. 19

mm, 2.4 m long) into powerhouse footings, incl. connection to rebar of powerhouse no. 4.0 230,000 920,000

8.22 Supply universal beam on tripod-type supports as rails for the

chain hoist (including corrosion protection) kg 135.0 10,000 1,350,000

8.23 Supply hand chain hoist, capacity 25 kN, with trolley, brand: "CM Cyclone, low head-room" or similar no. 1.0 6,000,000 6,000,000

Total Section 8 (carried forward to Summary Part A) 93,436,000 Section 9: Day work

9.1 3-tonne truck incl. operator day 1.0 1,400,000 1,400,000

9.2 Hydraulic excavator, track mounted, incl. operator day 1.0 1,800,000 1,800,000

9.3 Concrete vibrator, needle diameter 50 mm, incl. drive unit day 1.0 140,000 140,000

9.4 Concrete mixer, include drive unit day 1.0 450,000 450,000

9.5 Dewatering / sump pump; capacity 4 m3/h at 5 m head, incl. discharge hose day 1.0 350,000 350,000

9.6 Compaction equipment, incl. operator

a) hand-operated vibrating plate day 1.0 250,000 250,000 b) hand-operated mechanical rammer day 1.0 200,000 200,000

9.7 Electric welding plant incl. generator and welder, capacity 150 Amp. day 1.0 300,000 300,000

9.8 Unskilled labourer day 20.0 40,000 800,000

9.9 Semi-skilled labourer, day 10.0 60,000 600,000

9.10 Tradesman, (welder, bricklayer, concreter, carpenter,

fitter/machinist, sheet metal worker) day 5.0 80,000 400,000 Total Section 10 (carried forward to Summary Part A) 6,690,000 Summary Part A: Civil Works

1 Preliminary and General 250,000,000

116

2 River Intake Works 205,098,0003 Sand trap 143,250,0004 Headrace 853,634,2005 Storage Pond / Fore bay 36,789,6006 Spillway 52,360,0007 Penstock 172,250,0008 Powerhouse and Tailrace 93,436,0009 Day work 6,690,000 Total Part A: Civil Works 1,813,507,800

B Electro-mechanical Equipment

1.1 Elecro-mechanical equipment including: kW 244.0 8,300,000 2,025,200,000 - Transportation - Erection, Test, Commissioning and Training Total Part B: Electro-mechanical Equipment 2,025,200,000 (carried forward to Summary Page 1)

C Transmission and Distribution Lines Section 1: Transmission, MV, 35 kV

1.1 Transmission lines from Power house to EVN's transformer km 7.5 150,000,000 1,125,000,0001.2 Transmission line form 35 kV lines to hamlets km 14.2 150,000,000 2,130,000,000

Total Section 1 (carried forward to Summary Part C) 3,255,000,000 Section 2: Transmission, LV, 0.4 kV

2.1 Backbone line km 13.2 80,000,000 1,056,000,000 Total Section 2 (carried forward to Summary Part C) 1,056,000,000 Section 3: Transformer

3.1 Transformer 320 kVA, 35 kV/440 V, outdoor type set 1.0 140,000,000 140,000,0003.2 Transformer 25 kVA, 35 kV/440 V, outdoor type set 4.0 60,000,000 240,000,000

Total Section 3 (carried forward to Summary Part C) 380,000,000 Section 4: Distribution LV

4.1 Cable AAAC 3 x 15 mm2 km 20.5 5,000,000 102,500,0002.0 Household Connectors set 546.0 450,000 245,700,000

Total Section 4 (carried forward to Summary Part C) 348,200,000 Summary Part C: Transmission and Distribution Lines

1 Transmission 35 kV 3,255,000,0002 Transmission LV 1,056,000,0003 Distribution LV 348,200,0004 Transformer 380,000,000

117

Total Part C: Transmission and Distribution Lines 5,039,200,000

D Land Acquisition

1 Land lease certification (excluding yearly premium payments)m2 15,000,000

2 Administrative costs for land acquisition - - - Total Part D: 15,000,000 (carried forward to Summary Page 1)

E Project Support Costs

1 awareness rising - lump sum 25,000,000

2 community mobilisation - lump sum 100,000,000

3 Company formation - lump sum 0

4 feasibility study and engineering design - lump sum 120,000,000

5 project management and supervision - lump sum 150,000,000 Total Part E: Project Planning, Engineering Design and

Supervision VND 395,000,000 (carried forward to Summary Page 1)

F Contingency

1 for Part A: Civil Works: 10 % 181,350,800

2 for Part B: Electro-mechanical Equipment: 5% 101,260,000

3 for Parts C, D and E: all 8 % 435,936,000 Total Part F: Contingencies VND 718,546,800 (carried forward to Summary Page 1)

118

APPENDIX 4

OPTIMAZATION OF THE HYDROPWER SCHEME

119

Economic Avoided cost of EVN's power system

Dry season Wet season

US cent/kWh VND/kWh US cent/kWh VND/kWh

Energy 4.73 710 2.81 422

Generation Capacity 0.6 90 0.6 90

Network capacity 1.4 210 1.4 210

Total capacity 2 300 2 300

Energy plus Capacity 6.73 1010 4.81 722

Power consumption features and economic tariff for commune

Dry season Wet season

Electricity consumption 75% 25%

Peak load 65% 50%

Off peak load 35% 50%

Seasonal tariff (VND/kWh) 905 572

Avarage tariff (VND7kWh) 821.8

120

Input data for economic cost calculation

Giap Trung commune Number of households 546 Household Peak load 62.9 kW Annual electricity demand 163428 kWh Growth rate - First 3 years 2.50% - From year 4th 1.50% Losses in the commune grid 5% Discount rate 10% Analysed period 20 year Unit cost 35 KV MV lines 150 VND/km LV backbone lines 80 VND/km LV lines to households 5 VND/km 35 kV/0.4kV 320 kVA transformer 140 mil VND/set 35 kV/0.4kV 110 kVA transformer 100 mil VND/set 35 kV/0.4kV 25 kVA transformer 60 mil VND/set Connection fee 0.45 mil VND/HH Electricity tariff for household 1000 VND/kWh Electricity at National grid 606 VND/kWh Diesel genset cost 6.5 mil VND/kW Fuel consumption 0.45 l/kWh Fuel cost 5500 VND/l O&M cost for hydropower T/D lines 3.0% O&M cost for T/D lines 1.5% O&M cost for diesel generator 6.0% Technical option data

121

Option 1: Grid connected mini hydropower Investment cost MV lines to the commune, 14.2 km 2130.0 mil VND LV backbone lines, 13.2 km 1056.0 mil VND LV lines to households, 20.5 km 102.5 mil VND 35 kV/0.4kV 25 kVA transformer, 4 set 240.0 mil VND Connection fee, 546 households 245.7 mil VND Sub total investment cost 3774.2 mil VND Option 2: Off grid micro hydropower Investment cost for the micro hydropower, 82 kW 3140.0 mil VND MV lines form power house to the commune, 15.7 km 2355.0 mil VND LV backbone lines,13.2 km 1056.0 mil VND LV lines to households, 20.5 km 102.5 mil VND 35 kV/0.4kV 25 kVA transformer, 4 set 240.0 mil VND 35 kV/0.4kV 110 kVA transformer, 1 set 100.0 mil VND Connection fee, 546 households 245.7 mil VND Total investment cost 7239.2 mil VND Option 3: National Grid Connection MV lines, 14.2 + 6.8 = 21.0 km 3150 mil VND LV backbone lines, 13.2 km 1056 mil VND LV lines to households, 20.5 km 102.5 mil VND 35 kV/0.4kV 25 kVA transformer, 3 set 180 mil VND 35 kV/0.4kV 110 kVA transformer, 1 set 100.0 mil VND Connection fee, 546 households 245.7 mil VND Total investment cost 4834.2 mil VND Option 4: Diesel Genset Diesel Generators, 80 kW 520.0 mil VND LV backbone lines, 13.2 km 1056.0 mil VND LV lines to households, 20.5 km 102.5 mil VND Connection fee, 546 households 245.7 mil VND Total investment cost 1924.2 mil VND

122

Option 1: Grid connected hydropower

NPV 6,201.1 Mil. VND

Electricity cost 3,980 VND/kWh

Household cost 11.4 mil VND/HH

Year Investment cost O&M cost Electricity

demand Cost for

electricity Total mil. VND mil. VND 103 kWh mil. VND mil. VND

1 4108.2641 4108.32 61.6 167.5 211.1 272.73 61.6 171.7 216.3 278.04 61.6 176.0 221.8 283.45 61.6 178.6 225.1 286.76 61.6 181.3 228.5 290.17 61.6 184.0 231.9 293.58 61.6 186.8 235.4 297.09 61.6 189.6 238.9 300.5

10 61.6 192.4 242.5 304.111 61.6 195.3 246.1 307.712 61.6 198.3 249.8 311.413 61.6 201.2 253.5 315.214 61.6 204.2 257.4 319.015 61.6 207.3 261.2 322.816 61.6 210.4 265.1 326.817 61.6 213.6 269.1 330.718 61.6 216.8 273.1 334.819 61.6 220.0 277.2 338.920 61.6 223.3 281.4 343.021 61.6 226.7 285.6 347.222 61.6 230.1 289.9 351.523 61.6 233.5 294.3 355.924 61.6 237.0 298.7 360.325 61.6 240.6 303.1 364.8

123

Option 2: Off grid hydropower




Year Investment cost O&M cost Electricity

demand Cost for


1 6873.394 6873.42 144.7 167.5 144.73 144.7 171.7 144.74 144.7 176.0 144.75 144.7 178.6 144.76 144.7 181.3 144.77 144.7 184.0 144.78 144.7 186.8 144.79 144.7 189.6 144.7

10 144.7 192.4 144.711 144.7 195.3 144.712 144.7 198.3 144.713 144.7 201.2 144.714 144.7 204.2 144.715 144.7 207.3 144.716 144.7 210.4 144.717 144.7 213.6 144.718 144.7 216.8 144.719 144.7 220.0 144.720 144.7 223.3 144.721 616.3 144.7 226.7 761.022 144.7 230.1 144.723 144.7 233.5 144.724 144.7 237.0 144.725 144.7 240.6 144.7

124

Option 3: Connection to national grid




Investment cost O&M cost Electricity

demand Cost for


5058.936 5058.9 75.9 167.5 144.5 220.4 75.9 171.7 148.2 224.0 75.9 176.0 151.9 227.7 75.9 178.6 154.1 230.0 75.9 181.3 156.4 232.3 75.9 184.0 158.8 234.7 75.9 186.8 161.2 237.1 75.9 189.6 163.6 239.5 75.9 192.4 166.0 241.9 75.9 195.3 168.5 244.4 75.9 198.3 171.1 246.9 75.9 201.2 173.6 249.5 75.9 204.2 176.2 252.1 75.9 207.3 178.9 254.8 75.9 210.4 181.6 257.4 75.9 213.6 184.3 260.2 75.9 216.8 187.0 262.9 75.9 220.0 189.9 265.7 75.9 223.3 192.7 268.6 75.9 226.7 195.6 271.5 75.9 230.1 198.5 274.4 75.9 233.5 201.5 277.4 75.9 237.0 204.5 280.4 75.9 240.6 207.6 283.5

125

Option 4: Diesel Generators




Investment cost O&M cost Electricity

demand Fuel cost Total mil. VND mil. VND 103 kWh mil. VND mil. VND

1924.2 1924.2 115.5 167.5 435.3 550.8 115.5 171.7 446.2 561.7 115.5 176.0 457.4 572.8 115.5 178.6 464.2 579.7 115.5 181.3 471.2 586.6 115.5 184.0 478.3 593.7 115.5 186.8 485.4 600.9 115.5 189.6 492.7 608.2 115.5 192.4 500.1 615.6 115.5 195.3 507.6 623.1 115.5 198.3 515.2 630.7 115.5 201.2 522.9 638.4 115.5 204.2 530.8 646.2

1539.4 115.5 207.3 538.8 2193.6 115.5 210.4 546.8 662.3 115.5 213.6 555.0 670.5 115.5 216.8 563.4 678.8 115.5 220.0 571.8 687.3 115.5 223.3 580.4 695.8 115.5 226.7 589.1 704.5 115.5 230.1 597.9 713.4 115.5 233.5 606.9 722.4 115.5 237.0 616.0 731.5 115.5 240.6 625.2 740.7

126

Input data for economic benefit of investment

Giap Trung commune Number of households 546 Household Peak load 62.9 kW Annual electricity demand 163428 kWh Growth rate - First 3 years 2.5% - From year 4th 1.5% Losses in the commune grid - In commune grid 5.0% - In MV lines to national grid 1.0% General data Discount rate 10% Water fee 2% Analyzed period 20 year Economic price Electricity for household 4,213 VND/kWh Electricity for National grid (average) 606 VND/kWh - Wet season 422 VND/kWh - Dry season 710 VND/kWh O&M cost for hydropower 3.0% O&M cost for hydropower and T/D lines 1.5% Technical option data Option 1: Grid connected mini hydropower Investment cost for the micro hydropower 10006.5 mil VND - Hydropower plant 4409.5 mil VND - T&D transmission lines 5597.0 mil VND Annual output 1452354 kWh - Wet season 522755 kWh - Dry season 929599 kWh Option 2: Off grid micro hydropower Investment cost for the micro hydropower 6873.4 mil VND - Hydropower plant 2774.2 mil VND - T&D transmission lines 4099.2 mil VND Annual output 674862 mil VND

127

Option 1: Grid connected hydropower Net Present Value 1,592.7 mil VND Internal rate of return before tax 12.2% Electricity cost before tax 936.49 VND/kWh

Year Investment cost O&M Total cost Energy output Supply to Commune

Economic benefit

Feeding into National grid

Economic benefit Total revenue Cash flow

mil VND mil VND mil VND 103 kWh 103 kWh mil VND 103 kWh mil VND mil VND mil VND 1 10006.5 10006.5 -10006.5 2 216.2 216.2 1452 168 706 1264 766 1472 1255.7 3 216.2 216.2 1452 172 723 1259 764 1487 1270.7 4 216.2 216.2 1452 176 741 1255 761 1502 1286.1 5 216.2 216.2 1452 179 753 1252 759 1512 1295.5 6 216.2 216.2 1452 181 764 1249 758 1521 1305.1 7 216.2 216.2 1452 184 775 1247 756 1531 1314.9 8 216.2 216.2 1452 187 787 1244 754 1541 1324.8 9 216.2 216.2 1452 190 799 1241 752 1551 1334.8

10 216.2 216.2 1452 192 811 1238 751 1561 1345.0 11 216.2 216.2 1452 195 823 1235 749 1572 1355.3 12 216.2 216.2 1452 198 835 1232 747 1582 1365.8 13 216.2 216.2 1452 201 848 1229 745 1593 1376.5 14 216.2 216.2 1452 204 860 1226 743 1604 1387.3 15 216.2 216.2 1452 207 873 1222 741 1615 1398.3 16 216.2 216.2 1452 210 886 1219 739 1626 1409.4 17 216.2 216.2 1452 214 900 1216 737 1637 1420.7 18 216.2 216.2 1452 217 913 1212 735 1648 1432.2 19 216.2 216.2 1452 220 927 1209 733 1660 1443.8 20 216.2 216.2 1452 223 941 1206 731 1672 1455.7 21 1822.68 216.2 2038.9 1452 227 955 1202 729 1684 -355.0 22 216.2 216.2 1452 230 969 1199 727 1696 1479.8 23 216.2 216.2 1452 234 984 1195 725 1708 1492.2 24 216.2 216.2 1452 237 999 1191 722 1721 1504.8 25 216.2 216.2 1452 241 1014 1188 720 1734 1517.5

128

Option 2: Off grid hydropower Net Present Value (950.8) mil VND Internal rate of return before tax 8.0% Electricity cost before tax 4,823 VND/kWh

Year Investment cost O&M Total cost Annual output Supply to Commune

Feeding into National grid Total revenue Cash flow

mil VND mil VND mil VND 103 kWh 103 kWh 103 kWh mil VND mil VND 1 6873.4 6873.4 -6873.4 2 144.7 144.7 658 168 706 561.0 3 144.7 144.7 658 172 723 578.6 4 144.7 144.7 658 176 741 596.7 5 144.7 144.7 658 179 753 607.8 6 144.7 144.7 658 181 764 619.1 7 144.7 144.7 658 184 775 630.6 8 144.7 144.7 658 187 787 642.2 9 144.7 144.7 658 190 799 654.0

10 144.7 144.7 658 192 811 666.0 11 144.7 144.7 658 195 823 678.2 12 144.7 144.7 658 198 835 690.5 13 144.7 144.7 658 201 848 703.0 14 144.7 144.7 658 204 860 715.7 15 144.7 144.7 658 207 873 728.6 16 144.7 144.7 658 210 886 741.7 17 144.7 144.7 658 214 900 755.0 18 144.7 144.7 658 217 913 768.5 19 144.7 144.7 658 220 927 782.2 20 144.7 144.7 658 223 941 796.1 21 616.3 144.7 761.0 658 227 955 194.0 22 144.7 144.7 658 230 969 824.6 23 144.7 144.7 658 234 984 839.1 24 144.7 144.7 658 237 999 853.9 25 144.7 144.7 658 241 1014 868.9

129

APPENDIX 5

ECONOMIC AND FINANCIAL ANALYSIS

130

Ability and willing ness to pay for service

Total yearly cost of alternative energy to electricity 270.8 Mil VND Electricity need to meet the service 163428 kWh/year Willingness to pay 1657.2 VND/kWh General data Number of household 546 household Pico-hydro Penetration rate 74.2% Life span of Pico 30 months Cost for purchasing Owning Sharing

Price Household Cost Price Household Cost (VND) (HH) (VND) (VND) (HH) (VND)

250000 1 250000 100000 1 100000300000 4 1200000 280000 1 280000330000 1 330000 300000 2 600000350000 2 700000 380000 4 1520000360000 1 360000 500000 1 500000380000 1 380000 600000 1 600000400000 2 800000 700000 2 1400000

Average cost (VND) 387143 360000 Cost for maintenance Owning Sharing

Price Household Cost Price Household Cost (VND) (HH) (VND) (VND) (HH) (VND)

3000 2 6000 5000 2 100005000 4 20000 10000 3 30000

10000 5 50000 13000 1 1300018000 3 54000 18000 1 18000

20000 1 20000 25000 1 25000 40000 1 40000Average cost (VND) 9286 15600

131

Monthly average cost for one Pico （

VND） 24895Yearly average cost for whole commune 121.0 Kerosene Penetration rate 97.0% Kerosene cost 5000 VND/litre Monthly consumption Consumption Household Total cons. (litre) (HH) (litre) 0.2 1 0.2 0.5 3 1.5 0.8 1 0.8 1.0 15 15.0 1.5 2 3.0 2.0 6 12.0 3.0 3 9.0 4.0 1 4.0Average consumption (litre/household) 1.4 Yearly cost for whole commune (mil VND) 45.1 Dry cell battery Penetration rate 78.7% Proportion using for radio 50.0% Dry cell cost 2500 VND/pair Monthly consumption Consumption Household Total cons. (pair) (HH) (pair) 2.0 5 10.0 4.0 14 56.0 6.0 6 36.0 12.0 1 12.0Average using (pair/household) 4.4Yearly cost for whole commune (mil VND) 28.3 Diesel fuel Fuel cost 5500 VND/litre Yearly fuel consumption For rice husking 1848 Litre

132

For wood processing 12045 Liter Sum 13893 Liter Yearly fuel cost for the whole commune (mil VND) 76.4

133

Economic analysis for Giap Trung hydropower (Base case)

Economic indicators Net Present Value NPV 3,070.6 mil VND Internal rate of return EIRR 15.2% Electricity cost Pc 850.8 VND/kWh

Year Investment cost O&M Total cost Energy sold Supply to Commune

Economic benefit


Economic benefit Total benefit Cash flow


10 214.6 214.6 1452 192 811 1238 902 1712 1497.7 11 214.6 214.6 1452 195 823 1235 900 1723 1508.1 12 214.6 214.6 1452 198 835 1232 898 1733 1518.6 13 214.6 214.6 1452 201 848 1229 896 1744 1529.2 14 214.6 214.6 1452 204 860 1226 894 1755 1540.0 15 214.6 214.6 1452 207 873 1222 892 1766 1551.0 16 214.6 214.6 1452 210 886 1219 890 1777 1562.1 17 214.6 214.6 1452 214 900 1216 888 1788 1573.5 18 214.6 214.6 1452 217 913 1212 886 1800 1584.9 19 214.6 214.6 1452 220 927 1209 884 1811 1596.6 20 214.6 214.6 1452 223 941 1206 882 1823 1608.4 21 214.6 214.6 1452 227 955 1202 880 1835 1620.4 22 214.6 214.6 1452 230 969 1199 878 1847 1632.6 23 214.6 214.6 1452 234 984 1195 876 1860 1645.0 24 214.6 214.6 1452 237 999 1191 874 1872 1657.5 25 214.6 214.6 1452 241 1014 1188 871 1885 1670.2

134

Economic analysis for Giap Trung hydropower (Investment cost increases 10%)



Economic benefit




10 234.1 234.1 1452 192 811 1238 902 1712 1478.3 11 234.1 234.1 1452 195 823 1235 900 1723 1488.6 12 234.1 234.1 1452 198 835 1232 898 1733 1499.1 13 234.1 234.1 1452 201 848 1229 896 1744 1509.8 14 234.1 234.1 1452 204 860 1226 894 1755 1520.6 15 234.1 234.1 1452 207 873 1222 892 1766 1531.5 16 234.1 234.1 1452 210 886 1219 890 1777 1542.7 17 234.1 234.1 1452 214 900 1216 888 1788 1554.0 18 234.1 234.1 1452 217 913 1212 886 1800 1565.5 19 234.1 234.1 1452 220 927 1209 884 1811 1577.1 20 234.1 234.1 1452 223 941 1206 882 1823 1588.9 21 234.1 234.1 1452 227 955 1202 880 1835 1600.9 22 234.1 234.1 1452 230 969 1199 878 1847 1613.1 23 234.1 234.1 1452 234 984 1195 876 1860 1625.5 24 234.1 234.1 1452 237 999 1191 874 1872 1638.0 25 234.1 234.1 1452 241 1014 1188 871 1885 1650.8

135

Economic analysis for Giap Trung hydropower (Output decreases 10%)



Economic benefit




10 214.6 214.6 1307 192 811 1094 814 1625 1410.5 11 214.6 214.6 1307 195 823 1091 813 1635 1420.9 12 214.6 214.6 1307 198 835 1088 811 1646 1431.4 13 214.6 214.6 1307 201 848 1085 809 1657 1442.0 14 214.6 214.6 1307 204 860 1082 807 1667 1452.8 15 214.6 214.6 1307 207 873 1079 805 1678 1463.8 16 214.6 214.6 1307 210 886 1075 803 1690 1475.0 17 214.6 214.6 1307 214 900 1072 801 1701 1486.3 18 214.6 214.6 1307 217 913 1069 799 1712 1497.7 19 214.6 214.6 1307 220 927 1065 797 1724 1509.4 20 214.6 214.6 1307 223 941 1062 795 1736 1521.2 21 214.6 214.6 1307 227 955 1058 793 1748 1533.2 22 214.6 214.6 1307 230 969 1055 791 1760 1545.4 23 214.6 214.6 1307 234 984 1051 789 1772 1557.8 24 214.6 214.6 1307 237 999 1048 786 1785 1570.3 25 214.6 214.6 1307 241 1014 1044 784 1798 1583.1

136

Economic analysis for Giap Trung hydropower (Commune demand decreases 10%)



Economic benefit




10 214.6 214.6 1452 173 730 1258 914 1643 1428.8 11 214.6 214.6 1452 176 741 1255 912 1653 1438.1 12 214.6 214.6 1452 178 752 1252 910 1662 1447.5 13 214.6 214.6 1452 181 763 1250 909 1672 1457.1 14 214.6 214.6 1452 184 774 1247 907 1681 1466.9 15 214.6 214.6 1452 187 786 1244 905 1691 1476.7 16 214.6 214.6 1452 189 798 1241 904 1701 1486.8 17 214.6 214.6 1452 192 810 1238 902 1712 1496.9 18 214.6 214.6 1452 195 822 1235 900 1722 1507.3 19 214.6 214.6 1452 198 834 1232 898 1732 1517.8 20 214.6 214.6 1452 201 847 1229 896 1743 1528.4 21 214.6 214.6 1452 204 859 1226 894 1754 1539.2 22 214.6 214.6 1452 207 872 1223 892 1765 1550.2 23 214.6 214.6 1452 210 885 1219 890 1776 1561.3 24 214.6 214.6 1452 213 899 1216 888 1787 1572.6 25 214.6 214.6 1452 217 912 1213 886 1799 1584.0

137

Financial analysis for Giap Trung hydropower (Base case)

Indicator on Equity Net Present Value NPV 306.7 mil. VND Internal Rate of Return IRR 13.8% Payback Period PBP 10.0 Year Unit Cost Pc 617.6 VND/kWh

Investment cost Running cost Revenue Cash

Total - Foreign loan - Local loan Water Profit Electric Electric Income Income Input flow

Year Inves. Annual IDC Annual Interest Annual IDC Annual Interest Equity Grant Depre. O&M fee Tax sold to sold to from from VAT Total On

Cost Inves. payment payment Inves. payment payment commune Grid commune grid return Equity

mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 1769 53 0 0 2359 106 0 0 1769 5898 0 0 -1769 1 0 182 109 0 247 222 0 591 236 9 0 168 1264 201 736 500 1437 431 2 0 182 98 0 247 200 0 591 236 9 0 172 1259 206 733 0 939 -33 3 0 182 87 0 247 178 0 591 236 9 0 176 1255 211 731 0 942 2 4 0 182 77 0 247 155 0 591 236 9 0 179 1252 214 729 0 943 37 5 0 182 66 0 247 133 0 591 236 9 0 181 1249 218 727 0 945 72 6 0 182 55 0 247 111 0 591 236 9 0 184 1247 221 726 0 946 106 7 0 182 44 0 247 89 0 591 236 9 0 187 1244 224 724 0 948 141 8 0 182 33 0 247 67 0 591 236 9 1 190 1241 228 722 0 950 175 9 0 182 22 0 247 44 0 591 236 10 4 192 1238 231 721 0 951 207 10 0 182 11 0 247 22 0 591 236 10 6 195 1235 234 719 0 953 239 11 0 0 0 0 0 0 0 591 236 10 9 198 1232 238 717 0 955 700 12 0 0 0 0 0 0 0 591 236 10 18 201 1229 241 715 0 957 693 13 0 0 0 0 0 0 0 591 236 10 18 204 1226 245 713 0 959 695 14 0 0 0 0 0 0 0 591 236 10 18 207 1222 249 712 0 960 696 15 0 0 0 0 0 0 0 591 236 10 19 210 1219 253 710 0 962 698 16 0 0 0 0 0 0 0 591 236 10 19 214 1216 256 708 0 964 699 17 0 0 0 0 0 0 0 591 236 10 19 217 1212 260 706 0 966 701 18 0 0 0 0 0 0 0 591 236 10 20 220 1209 264 704 0 968 702 19 0 0 0 0 0 0 0 591 236 10 20 223 1206 268 702 0 970 704 20 0 0 0 0 0 0 0 591 236 10 20 227 1202 272 700 0 972 706 21 1823 0 0 0 0 0 0 1823 122 236 10 91 230 1199 276 698 0 974 -1186 22 0 0 0 0 0 0 0 122 236 10 91 234 1195 280 696 91 1067 730 23 0 0 0 0 0 0 0 122 236 10 92 237 1191 284 694 0 978 640 24 0 0 0 0 0 0 0 122 236 10 92 241 1188 289 691 0 980 642 25 0 0 0 0 0 0 0 122 236 10 92 244 1184 293 689 0 982 644

138

Financial analysis for Giap Trung hydropower (Tariff to national grid increases 10%)






mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 1769 53 0 0 2359 106 0 0 1769 5898 0 0 -1769 1 0 182 109 0 247 222 0 591 236 10 0 168 1264 201 809 500 1511 504 2 0 182 98 0 247 200 0 591 236 10 0 172 1259 206 806 0 1012 39 3 0 182 87 0 247 178 0 591 236 10 0 176 1255 211 804 0 1015 75 4 0 182 77 0 247 155 0 591 236 10 0 179 1252 214 802 0 1016 109 5 0 182 66 0 247 133 0 591 236 10 0 181 1249 218 800 0 1018 144 6 0 182 55 0 247 111 0 591 236 10 1 184 1247 221 798 0 1019 177 7 0 182 44 0 247 89 0 591 236 10 4 187 1244 224 796 0 1021 209 8 0 182 33 0 247 67 0 591 236 10 6 190 1241 228 795 0 1022 241 9 0 182 22 0 247 44 0 591 236 10 9 192 1238 231 793 0 1024 273

10 0 182 11 0 247 22 0 591 236 10 12 195 1235 234 791 0 1025 305 11 0 0 0 0 0 0 0 591 236 10 14 198 1232 238 789 0 1027 766 12 0 0 0 0 0 0 0 591 236 10 29 201 1229 241 787 0 1028 753 13 0 0 0 0 0 0 0 591 236 10 29 204 1226 245 785 0 1030 755 14 0 0 0 0 0 0 0 591 236 10 29 207 1222 249 783 0 1031 756 15 0 0 0 0 0 0 0 591 236 10 29 210 1219 253 781 0 1033 757 16 0 0 0 0 0 0 0 591 236 10 30 214 1216 256 779 0 1035 759 17 0 0 0 0 0 0 0 591 236 10 30 217 1212 260 776 0 1037 760 18 0 0 0 0 0 0 0 591 236 10 30 220 1209 264 774 0 1038 762 19 0 0 0 0 0 0 0 591 236 10 30 223 1206 268 772 0 1040 763 20 0 0 0 0 0 0 0 591 236 10 31 227 1202 272 770 0 1042 765 21 1823 0 0 0 0 0 0 1823 122 236 10 101 230 1199 276 768 0 1044 -1127 22 0 0 0 0 0 0 0 122 236 10 102 234 1195 280 765 91 1137 788 23 0 0 0 0 0 0 0 122 236 10 102 237 1191 284 763 0 1047 699 24 0 0 0 0 0 0 0 122 236 10 102 241 1188 289 761 0 1049 700 25 0 0 0 0 0 0 0 122 236 11 102 244 1184 293 758 0 1051 702

139

Financial analysis for Giap Trung hydropower (Commune demand increases 10%)






mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 1769 53 0 0 2359 106 0 0 1769 5898 0 0 -1769 1 0 182 109 0 247 222 0 591 236 9 0 184 1246 221 726 500 1447 441 2 0 182 98 0 247 200 0 591 236 9 0 189 1241 227 723 0 949 -23 3 0 182 87 0 247 178 0 591 236 10 0 194 1237 232 720 0 952 13 4 0 182 77 0 247 155 0 591 236 10 0 196 1234 236 718 0 954 47 5 0 182 66 0 247 133 0 591 236 10 0 199 1231 239 716 0 956 82 6 0 182 55 0 247 111 0 591 236 10 0 202 1227 243 715 0 957 117 7 0 182 44 0 247 89 0 591 236 10 0 205 1224 247 713 0 959 152 8 0 182 33 0 247 67 0 591 236 10 2 209 1221 250 711 0 961 185 9 0 182 22 0 247 44 0 591 236 10 4 212 1218 254 709 0 963 218 10 0 182 11 0 247 22 0 591 236 10 7 215 1214 258 707 0 965 250 11 0 0 0 0 0 0 0 591 236 10 10 218 1211 262 705 0 967 711 12 0 0 0 0 0 0 0 591 236 10 20 221 1208 266 703 0 969 703 13 0 0 0 0 0 0 0 591 236 10 20 225 1204 270 701 0 971 705 14 0 0 0 0 0 0 0 591 236 10 20 228 1201 274 699 0 973 706 15 0 0 0 0 0 0 0 591 236 10 21 231 1197 278 697 0 975 708 16 0 0 0 0 0 0 0 591 236 10 21 235 1194 282 695 0 977 710 17 0 0 0 0 0 0 0 591 236 10 21 238 1190 286 693 0 979 712 18 0 0 0 0 0 0 0 591 236 10 22 242 1186 290 691 0 981 713 19 0 0 0 0 0 0 0 591 236 10 22 246 1182 295 688 0 983 715 20 0 0 0 0 0 0 0 591 236 10 22 249 1179 299 686 0 985 717 21 1823 0 0 0 0 0 0 1823 122 236 10 93 253 1175 304 684 0 988 -1174 22 0 0 0 0 0 0 0 122 236 10 93 257 1171 308 682 91 1081 742 23 0 0 0 0 0 0 0 122 236 10 94 261 1167 313 679 0 992 652 24 0 0 0 0 0 0 0 122 236 10 94 265 1163 318 677 0 994 654 25 0 0 0 0 0 0 0 122 236 10 94 269 1159 322 674 0 997 656

140

Financial analysis for Giap Trung hydropower (Foreign loan accounts for 70%)






mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 4129 124 0 0 0 0 0 0 1769 5898 0 0 -1769 1 0 425 255 0 0 0 0 570 236 9 0 168 1264 201 736 500 1437 511 2 0 425 230 0 0 0 0 570 236 9 0 172 1259 206 733 0 939 39 3 0 425 204 0 0 0 0 570 236 9 0 176 1255 211 731 0 942 67 4 0 425 179 0 0 0 0 570 236 9 0 179 1252 214 729 0 943 94 5 0 425 153 0 0 0 0 570 236 9 0 181 1249 218 727 0 945 121 6 0 425 128 0 0 0 0 570 236 9 0 184 1247 221 726 0 946 148 7 0 425 102 0 0 0 0 570 236 9 2 187 1244 224 724 0 948 173 8 0 425 77 0 0 0 0 570 236 9 4 190 1241 228 722 0 950 198 9 0 425 51 0 0 0 0 570 236 10 6 192 1238 231 721 0 951 223 10 0 425 26 0 0 0 0 570 236 10 8 195 1235 234 719 0 953 248 11 0 0 0 0 0 0 0 570 236 10 10 198 1232 238 717 0 955 699 12 0 0 0 0 0 0 0 570 236 10 21 201 1229 241 715 0 957 690 13 0 0 0 0 0 0 0 570 236 10 21 204 1226 245 713 0 959 691 14 0 0 0 0 0 0 0 570 236 10 22 207 1222 249 712 0 960 693 15 0 0 0 0 0 0 0 570 236 10 22 210 1219 253 710 0 962 694 16 0 0 0 0 0 0 0 570 236 10 22 214 1216 256 708 0 964 696 17 0 0 0 0 0 0 0 570 236 10 22 217 1212 260 706 0 966 698 18 0 0 0 0 0 0 0 570 236 10 23 220 1209 264 704 0 968 699 19 0 0 0 0 0 0 0 570 236 10 23 223 1206 268 702 0 970 701 20 0 0 0 0 0 0 0 570 236 10 23 227 1202 272 700 0 972 703 21 1823 0 0 0 0 0 0 1823 122 236 10 91 230 1199 276 698 0 974 -1186 22 0 0 0 0 0 0 0 122 236 10 91 234 1195 280 696 91 1067 730 23 0 0 0 0 0 0 0 122 236 10 92 237 1191 284 694 0 978 640 24 0 0 0 0 0 0 0 122 236 10 92 241 1188 289 691 0 980 642 25 0 0 0 0 0 0 0 122 236 10 92 244 1184 293 689 0 982 644

141

Financial analysis for Giap Trung hydropower (Interest of local loan reduces to 7%)






mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 1769 53 0 0 2359 83 0 0 1769 5898 0 0 -1769 1 0 182 109 0 244 171 0 577 236 9 0 168 1264 201 736 500 1437 485 2 0 182 98 0 244 154 0 577 236 9 0 172 1259 206 733 0 939 15 3 0 182 87 0 244 137 0 577 236 9 0 176 1255 211 731 0 942 45 4 0 182 77 0 244 120 0 577 236 9 0 179 1252 214 729 0 943 75 5 0 182 66 0 244 103 0 577 236 9 0 181 1249 218 727 0 945 105 6 0 182 55 0 244 85 0 577 236 9 0 184 1247 221 726 0 946 134 7 0 182 44 0 244 68 0 577 236 9 1 187 1244 224 724 0 948 163 8 0 182 33 0 244 51 0 577 236 9 3 190 1241 228 722 0 950 190 9 0 182 22 0 244 34 0 577 236 10 5 192 1238 231 721 0 951 218 10 0 182 11 0 244 17 0 577 236 10 8 195 1235 234 719 0 953 245 11 0 0 0 0 0 0 0 577 236 10 10 198 1232 238 717 0 955 699 12 0 0 0 0 0 0 0 577 236 10 20 201 1229 241 715 0 957 691 13 0 0 0 0 0 0 0 577 236 10 20 204 1226 245 713 0 959 692 14 0 0 0 0 0 0 0 577 236 10 21 207 1222 249 712 0 960 694 15 0 0 0 0 0 0 0 577 236 10 21 210 1219 253 710 0 962 695 16 0 0 0 0 0 0 0 577 236 10 21 214 1216 256 708 0 964 697 17 0 0 0 0 0 0 0 577 236 10 21 217 1212 260 706 0 966 699 18 0 0 0 0 0 0 0 577 236 10 22 220 1209 264 704 0 968 700 19 0 0 0 0 0 0 0 577 236 10 22 223 1206 268 702 0 970 702 20 0 0 0 0 0 0 0 577 236 10 22 227 1202 272 700 0 972 704 21 1823 0 0 0 0 0 0 1823 122 236 10 91 230 1199 276 698 0 974 -1186 22 0 0 0 0 0 0 0 122 236 10 91 234 1195 280 696 91 1067 730 23 0 0 0 0 0 0 0 122 236 10 92 237 1191 284 694 0 978 640 24 0 0 0 0 0 0 0 122 236 10 92 241 1188 289 691 0 980 642 25 0 0 0 0 0 0 0 122 236 10 92 244 1184 293 689 0 982 644

142

Financial analysis for Giap Trung hydropower (Investment cost increases 10%)

Indicator on Equity Net Present Value NPV (263.9) mil. VND Internal Rate of Return IRR 10.6% Payback Period PBP 11.0 Year Unit Cost Pc 675.9 VND/kWh





mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 11007 1946 58 0 0 2595 117 0 0 1946 6488 0 0 -1946 1 0 200 120 0 271 244 0 651 258 9 0 168 1264 201 736 550 1487 384 2 0 200 108 0 271 220 0 651 258 9 0 172 1259 206 733 0 939 -128 3 0 200 96 0 271 195 0 651 258 9 0 176 1255 211 731 0 942 -89 4 0 200 84 0 271 171 0 651 258 9 0 179 1252 214 729 0 943 -51 5 0 200 72 0 271 146 0 651 258 9 0 181 1249 218 727 0 945 -13 6 0 200 60 0 271 122 0 651 258 9 0 184 1247 221 726 0 946 25 7 0 200 48 0 271 98 0 651 258 9 0 187 1244 224 724 0 948 63 8 0 200 36 0 271 73 0 651 258 9 0 190 1241 228 722 0 950 101 9 0 200 24 0 271 49 0 651 258 10 0 192 1238 231 721 0 951 140 10 0 200 12 0 271 24 0 651 258 10 0 195 1235 234 719 0 953 178 11 0 0 0 0 0 0 0 651 258 10 3 198 1232 238 717 0 955 685 12 0 0 0 0 0 0 0 651 258 10 6 201 1229 241 715 0 957 683 13 0 0 0 0 0 0 0 651 258 10 6 204 1226 245 713 0 959 685 14 0 0 0 0 0 0 0 651 258 10 6 207 1222 249 712 0 960 687 15 0 0 0 0 0 0 0 651 258 10 7 210 1219 253 710 0 962 688 16 0 0 0 0 0 0 0 651 258 10 7 214 1216 256 708 0 964 690 17 0 0 0 0 0 0 0 651 258 10 7 217 1212 260 706 0 966 691 18 0 0 0 0 0 0 0 651 258 10 7 220 1209 264 704 0 968 693 19 0 0 0 0 0 0 0 651 258 10 8 223 1206 268 702 0 970 695 20 0 0 0 0 0 0 0 651 258 10 8 227 1202 272 700 0 972 696 21 1823 0 0 0 0 0 0 1823 122 258 10 88 230 1199 276 698 0 974 -1204 22 0 0 0 0 0 0 0 122 258 10 88 234 1195 280 696 91 1067 711 23 0 0 0 0 0 0 0 122 258 10 88 237 1191 284 694 0 978 622 24 0 0 0 0 0 0 0 122 258 10 89 241 1188 289 691 0 980 624 25 0 0 0 0 0 0 0 122 258 10 89 244 1184 293 689 0 982 626

143

Financial analysis for Giap Trung hydropower (Output decreases 10%)

Indicator on Equity Net Present Value NPV (247.6) mil. VND Internal Rate of Return IRR 10.6% Payback Period PBP 11.0 Year Unit Cost Pc 685.5 VND/kWh





mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 1769 53 0 0 2359 106 0 0 1769 5898 0 0 -1769 1 0 182 109 0 247 222 0 591 236 9 0 168 1120 201 652 500 1353 348 2 0 182 98 0 247 200 0 591 236 9 0 172 1116 206 649 0 855 -116 3 0 182 87 0 247 178 0 591 236 9 0 176 1111 211 647 0 858 -81 4 0 182 77 0 247 155 0 591 236 9 0 179 1108 214 645 0 860 -46 5 0 182 66 0 247 133 0 591 236 9 0 181 1106 218 644 0 861 -11 6 0 182 55 0 247 111 0 591 236 9 0 184 1103 221 642 0 863 24 7 0 182 44 0 247 89 0 591 236 9 0 187 1100 224 640 0 864 58 8 0 182 33 0 247 67 0 591 236 9 0 190 1097 228 639 0 866 93 9 0 182 22 0 247 44 0 591 236 9 0 192 1094 231 637 0 868 128 10 0 182 11 0 247 22 0 591 236 9 0 195 1091 234 635 0 870 163 11 0 0 0 0 0 0 0 591 236 9 3 198 1088 238 633 0 871 624 12 0 0 0 0 0 0 0 591 236 9 5 201 1085 241 632 0 873 623 13 0 0 0 0 0 0 0 591 236 9 6 204 1082 245 630 0 875 624 14 0 0 0 0 0 0 0 591 236 9 6 207 1079 249 628 0 877 626 15 0 0 0 0 0 0 0 591 236 9 6 210 1075 253 626 0 878 627 16 0 0 0 0 0 0 0 591 236 9 7 214 1072 256 624 0 880 629 17 0 0 0 0 0 0 0 591 236 9 7 217 1069 260 622 0 882 630 18 0 0 0 0 0 0 0 591 236 9 7 220 1065 264 620 0 884 632 19 0 0 0 0 0 0 0 591 236 9 7 223 1062 268 618 0 886 634 20 0 0 0 0 0 0 0 591 236 9 8 227 1058 272 616 0 888 635 21 1823 0 0 0 0 0 0 1823 122 236 9 79 230 1055 276 614 0 890 -1256 22 0 0 0 0 0 0 0 122 236 9 79 234 1051 280 612 91 983 659 23 0 0 0 0 0 0 0 122 236 9 79 237 1048 284 610 0 894 570 24 0 0 0 0 0 0 0 122 236 9 79 241 1044 289 608 0 896 572 25 0 0 0 0 0 0 0 122 236 9 80 244 1040 293 606 0 899 574

144

Financial analysis for Giap Trung hydropower (Commune demand decreases 10%)






mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 1769 53 0 0 2359 106 0 0 1769 5898 0 0 -1769 1 0 182 109 0 247 222 0 591 236 9 0 151 1281 181 746 500 1427 421 2 0 182 98 0 247 200 0 591 236 9 0 155 1277 185 744 0 929 -44 3 0 182 87 0 247 178 0 591 236 9 0 158 1273 190 741 0 931 -8 4 0 182 77 0 247 155 0 591 236 9 0 161 1271 193 740 0 933 26 5 0 182 66 0 247 133 0 591 236 9 0 163 1268 196 738 0 934 61 6 0 182 55 0 247 111 0 591 236 9 0 166 1266 199 737 0 936 96 7 0 182 44 0 247 89 0 591 236 9 0 168 1263 202 735 0 937 130 8 0 182 33 0 247 67 0 591 236 9 0 171 1260 205 734 0 939 165 9 0 182 22 0 247 44 0 591 236 9 3 173 1258 208 732 0 940 197 10 0 182 11 0 247 22 0 591 236 9 5 176 1255 211 731 0 942 229 11 0 0 0 0 0 0 0 591 236 9 8 178 1252 214 729 0 943 690 12 0 0 0 0 0 0 0 591 236 9 16 181 1250 217 727 0 945 683 13 0 0 0 0 0 0 0 591 236 9 16 184 1247 221 726 0 946 684 14 0 0 0 0 0 0 0 591 236 9 17 187 1244 224 724 0 948 686 15 0 0 0 0 0 0 0 591 236 9 17 189 1241 227 722 0 950 687 16 0 0 0 0 0 0 0 591 236 10 17 192 1238 231 721 0 951 688 17 0 0 0 0 0 0 0 591 236 10 17 195 1235 234 719 0 953 690 18 0 0 0 0 0 0 0 591 236 10 18 198 1232 238 717 0 955 691 19 0 0 0 0 0 0 0 591 236 10 18 201 1229 241 715 0 957 693 20 0 0 0 0 0 0 0 591 236 10 18 204 1226 245 714 0 958 694 21 1823 0 0 0 0 0 0 1823 122 236 10 89 207 1223 248 712 0 960 -1197 22 0 0 0 0 0 0 0 122 236 10 89 210 1219 252 710 91 1053 718 23 0 0 0 0 0 0 0 122 236 10 89 213 1216 256 708 0 964 629 24 0 0 0 0 0 0 0 122 236 10 90 217 1213 260 706 0 966 630 25 0 0 0 0 0 0 0 122 236 10 90 220 1209 264 704 0 968 632

145

Financial analysis for Giap Trung hydropower (Local accounts for 70%)






mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND mil.VND 103 kWh 103 kWh mil.VND mil.VND mil.VND mil.VND mil.VND 0 10006 0 0 0 0 4129 186 0 0 1769 5898 0 0 -1769 1 0 0 0 0 431 388 0 607 236 9 0 168 1264 201 736 500 1437 372 2 0 0 0 0 431 349 0 607 236 9 0 172 1259 206 733 0 939 -87 3 0 0 0 0 431 311 0 607 236 9 0 176 1255 211 731 0 942 -46 4 0 0 0 0 431 272 0 607 236 9 0 179 1252 214 729 0 943 -6 5 0 0 0 0 431 233 0 607 236 9 0 181 1249 218 727 0 945 35 6 0 0 0 0 431 194 0 607 236 9 0 184 1247 221 726 0 946 75 7 0 0 0 0 431 155 0 607 236 9 0 187 1244 224 724 0 948 116 8 0 0 0 0 431 116 0 607 236 9 0 190 1241 228 722 0 950 156 9 0 0 0 0 431 78 0 607 236 10 2 192 1238 231 721 0 951 195 10 0 0 0 0 431 39 0 607 236 10 5 195 1235 234 719 0 953 233 11 0 0 0 0 0 0 0 607 236 10 8 198 1232 238 717 0 955 702 12 0 0 0 0 0 0 0 607 236 10 16 201 1229 241 715 0 957 695 13 0 0 0 0 0 0 0 607 236 10 16 204 1226 245 713 0 959 697 14 0 0 0 0 0 0 0 607 236 10 16 207 1222 249 712 0 960 698 15 0 0 0 0 0 0 0 607 236 10 16 210 1219 253 710 0 962 700 16 0 0 0 0 0 0 0 607 236 10 17 214 1216 256 708 0 964 702 17 0 0 0 0 0 0 0 607 236 10 17 217 1212 260 706 0 966 703 18 0 0 0 0 0 0 0 607 236 10 17 220 1209 264 704 0 968 705 19 0 0 0 0 0 0 0 607 236 10 18 223 1206 268 702 0 970 706 20 0 0 0 0 0 0 0 607 236 10 18 227 1202 272 700 0 972 708 21 1823 0 0 0 0 0 0 1823 122 236 10 91 230 1199 276 698 0 974 -1186 22 0 0 0 0 0 0 0 122 236 10 91 234 1195 280 696 91 1067 730 23 0 0 0 0 0 0 0 122 236 10 92 237 1191 284 694 0 978 640 24 0 0 0 0 0 0 0 122 236 10 92 241 1188 289 691 0 980 642 25 0 0 0 0 0 0 0 122 236 10 92 244 1184 293 689 0 982 644

146

APPENDIX 6

PHOTOGRAPHS

147

Houses in Giap Trung commune. Source: Oliver, Entec, 2002

Nam Nung stream. Source: Oliver, Entec, 2002

148

Road to Giap Trung commune and Track to power weir site. Source: Oliver, Entec, 2002

Children at school. Source: Oliver, Entec, 2002

149

Declaration

I hereby certify that this paper/dissertation was independently written by me. No

material was used other than that referred to. Sources directly quoted and ideas used,

including figures, tables, sketches, drawings and photos, have been correctly denoted.

Those not otherwise indicated belong to the author.

Flensburg, March 20th, 2003

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