LOGOLOGO

ELECTRICITY IN VIETNAM

THI TRANG NHUNG NGUYEN

ID: 15714

M-EF SS2013

WHEN GOVERNMENT DOES THINGSBY HALVES

May 28th, 2014

RHEIN-WAAL UNIVERSITY OF APPLIED SCIENCES

FACULTY OF SOCIAL SCIENCE AND ECONOMICS

Advanced Public Finance

INTRODUCTION

• Geography: - Center of south-east Asia- Surrounding: many

developing and developed countries

- Strategic position in future development

INTRODUCTION

• Political issues: - Before 1990: closed economy, governmental-firms-centric,

denies all the market rules. - Now: followed the market economy (socialism orientation)• General behaviors of inhabitants: - Not aggressive in arguments - Accept the rule from above

INTRODUCTION

• Economics development: Fast growing, many opportunities

• Infrastructure: Underdeveloped. Especially for energy industry

it’s normal to have “electric cut”, both preannounced and unexpected.

http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:22309013~menuPK:4754051~pagePK:51236175~piPK:437394~theSitePK:73154,00.html

INTRODUCTION

• Electricity: - Demand for electricity: grow 70% faster than GDP- Generation of power tends to follow the nation’s resource

endowment.

APPLICATION OF THEORIES:Public goods

• Excludability: in modernizing society, it is not feasible to exclude anyone from the benefits of using electricity

• Rivalry in consumption: Big debate

- Governmental construction of power plants and transmission network: MC = 0

- Lack of supply => could be some rivalry- Policy-makers: treated electricity as a

public good

Rivalry in consumption

Yes No

Exclusion from

consump-tion

YesPrivate goods Toll goods

No Common goods

Public goods

APPLICATION OF THEORIES:Externalities

Positive Externalities

• Substantially contribute to economic development

• Consumers surplus of using electricity:

satisfy basic living requirements and standards

• Created jobs for citizens.

Negative Externalities:

• Environmentally: - Thermal fuels: CO2 and SO2 emissions. - Nuclear power: radioactive risks. - Large hydro projects: disappearance of

forests, loss of biodiversity, alter the river downstream.

• Social costs :- Changes in lifestyle and loss of

livelihood- Rehabilitation compensation- Loss of jobs for farmers.

APPLICATION OF THEORIES:Natural monopoly

• For producing and distributing electricity firms: declining average and marginal costs

• public policy chose a regulated monopoly framework. Electricity should be affordable, reliable and available at reasonably stable and predictable price => doubt that open market would achieve these objectives

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

REALITY STORY:When government does things by halves

FURTHER QUESTIONS

• Whether this vital public service might be better supplied by a competitive commodity market than by the monopoly one we have relied on for decades?

• Should power plants be left in the hands of the government given the various market failure situations and the fact that it involves massive sunk costs which the private sector might not be able to handle?

REFERENCES

• http://www.geni.org/globalenergy/library/energy-issues/vietnam/index.shtml• http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/IDA/0,,contentMDK:2

2309013~menuPK:4754051~pagePK:51236175~piPK:437394~theSitePK:73154,00.html

• http://www.wutc.wa.gov/webdocs.nsf/b8da29aede8fdd67882571430005a9c1/23ce15c1d6a0d32b882564970064d827!OpenDocument

• http://www.renewableenergyworld.com/rea/news/article/2007/07/is-energy-a-public-good-49201

• http://www.teriin.org/ee/pdf/fcaoverview.pdf

THANK YOU FOR YOUR ATTENTION!