Vietnam Loses $1.4B from Power Outages: World Bank

According to the World Bank, power outages in May and June have resulted in an estimated cost of $1.4 billion for Vietnam, which accounts for approximately 0.3% of its GDP. The northern regions of Vietnam experienced frequent power disruptions during this period due to increased demand and a significant decrease in hydropower supply caused by droughts. As a consequence, numerous factories in the affected areas were unable to operate for several hours multiple times a week. Dorsati Madani, a senior economist at the World Bank, revealed these figures during a recent meeting, calculating the losses based on unmet power demand, which amounted to 36 GWh in 2022 and 900 GWh in May and June of this year.

Surveys conducted by the World Bank on industrial businesses in northern Vietnam showed that power outages led to revenue losses of 10%, while unmet power demand also resulted in a revenue loss of approximately $75 million for Vietnam Electricity. The World Bank attributed the power supply imbalance in northern Vietnam to its heavy reliance on hydropower and coal, both of which faced material shortages, causing delays in energy production and distribution. Additionally, the limited capacity for distribution hindered access to the excess energy supply of around 20 GW in southern Vietnam.

To address these issues, the World Bank recommended increasing investments in the power distribution system. The European Chamber of Commerce, in a July report, suggested that the government focus on long-term plans to mitigate the cyclical nature of power outages. In the meantime, the World Bank proposed several solutions, including establishing schedules for the commercial operation of power plants in 2024 and 2025, investing in distribution systems, and diversifying power sources.