The Electricity Law for Vietnam Status and Policy Issues The Socialist Republic of Vietnam ESM259 Energy Sector Management Assistance Programme ICAA A ID Report 259/02 NiA t A D T August 2002 JOINT UNDP / WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) is a special global technical assistance partnership sponsored by the UNDP, the World Bank and bi-lateral official donors. Established with the support of UNDP and bilateral official donors in 1983, ESMAP is managed by the World Bank. ESMAP's mission is to promote the role of energy in poverty reduction and economic growth in an environmentally responsible manner. Its work applies to low-income, emerging, and transition economies and contributes to the achievement of intemationally agreed development goals. ESMAP interventions are knowledge products including free technical assistance, specific studies, advisory services, pilot projects, knowledge generation and dissemination, trainings, workshops and seminars, conferences and roundtables, and publications. ESMAP work is focused on three priority areas: access to modern energy for the poorest, the development of sustainable energy markets, and the promotion of environmentally sustainable energy practices. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (the ESMAP CG) composed of representatives of the UNDP and World Bank, other donors, and development experts from regions which benefit from ESMAP's assistance. The ESMAP CG is chaired by a World Bank Vice President, and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Programme's strategic agenda, its work plan, and its achievements. ESMAP relies on a cadre of engineers, energy planners, and economists from the World Bank, and from the energy and development community at large, to conduct its activities under the guidance of the Manager of ESMAP. FUNDING ESMAP is a knowledge partnership supported by the World Bank, the UNDP and official donors from Belgium, Canada, Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. ESMAP has also enjoyed the support of private donors as well as in-kind support from a number of partners in the energy and development community. FURTHER INFORMATION For further information, a copy of the ESMAP Annual Report, or copies of project reports, etc, please visit the ESMAP website: www.esmap.or-i. ESMAP can be reached by email at esmap(rnworldbank.orn or by mail at: ESMAP c/o Energy and Water The World Bank 1818 H Street, NW Washington, DC 20433 U.S.A. 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ESMAP Management" iii Contents Introduction and Overview Report Objectives ......................................................1 Background ......................................................1 Support for the Preparation of the Electricity Law ......................................................2 Key Steps - 1996-2000 ......................................................3 Secondary Regulations ......................................................4 Advancing the Electricity Law ......................................................5 The Round Table on Policy and Law ....................................................7 Introduction and Objective ......................................................7 Round Table Format and Methodology ......................................................7 Round Table Program ......................................................8 Round Table Outcomes ......................................................9 Main objectives of the power sector in Vietnam ...................................................... 9 Problem analysis and prioritization ..................................................... 11 Identifying issues to be addressed in power-sector policy ........................................... 16 Prioritization on Policy Issues ..................................................... 21 Discussion on follow-up Policy Guidance Document ..................................................... 23 Purpose of the Policy Guidance Document ..................................................... 23 Structure of the Policy Guidance Document ..................................................... 23 Policy Statements Issued by the Ministry of Industry ................................................. 23 The Policy Guidance Document ..................................................... 24 Review of the Draft Law ..................................................... 33 Introduction ..................................................... 33 The Electricity Law in the Reform Process - The Importance of Clarity ................... 34 Balance between the Law and Decrees ..................................................... 34 v 1 Introduction and Overview Report Objectives 1.1 This report has four main objectives: 1. To provide a status report on the work undertaken since 1996 to prepare the draft Electricity Law and associated secondary regulations (Chapter 1). 2. To review the outcomes of the September 2000 round table that used objective-oriented planning methodology to identify the issues constraining the finalization of an effective electricity law for Vietnam (Chapter 2). 3. To provide recommendations on the immediate and medium-termn policy issues that the Government should address to facilitate drafting an effective electricity law (Chapter 3). 4. To provide a review of the fourteenth draft of the Electricity Law (March 2001) and draft decrees on tariffs and regulation with specific suggestions on how the policy issues and recommendations discussed in Chapter 3 may be addressed in subsequent drafting work (Chapter 4). Background 1.2 The Government of Vietnam has been working for six years to prepare a new Electricity Law that would facilitate key structural, governance, and regulatory reforms in the power sector. The principal objective of these reforms is to enhance the efficiency and effectiveness of the power sector to meet the needs of a growing economy and ultimately to provide electricity to the entire population of Vietnam. 1.3 The need for the Electricity Law was recognized by the Prime Minister in 1996, for two main reasons. First, no basic law governing the power sector had been approved at the level of the National Assembly - existing legal documents passed since 1960 were largely in the form of decrees and directives that were often inconsistent with each other. Second, the existing framework of decrees was not suitable for the wider economic transition, particularly in the power sector, to a socialist market orientation. 2 The Electricity Law for Vietnam Given these imperatives, the specific objectives of the Government in establishing a new Electricity Law were: * To attract domestic and foreign investment in power-sector activities; * To ensure equality, fairness, and protection from monopolistic behavior in power sales and purchases; * To protect the legal rights of power consumers and establish their legal obligations; and * To ensure the efficient operation of the power sector. 1,4 In 1996, the Prime Minister directed the Minister of Industry to establish a program and plan to draft the Electricity Law. After six years of work and consultation with the relevant ministries, state agencies, provincial People's Committees, representatives of large consumers, power enterprises, and the international investment community, the primary Law is now in its fourteenth draft. Several secondary regulations have also been drafted to support the implementation of the primary Electricity Law. 1.5 Despite the efforts of an extremely competent working group and the guidance of the Steering Committee headed by the Minister, the fourteenth draft of the Electricity Law falls short of achieving its objectives. Several factors have constrained the preparation of an effective Electricity Law for Vietnam. Perhaps the most significant factor is that the legal drafting proceeded with policy guidance and basic assumptions that were not always clear. It may also be argued that there is limited Government commitment to undertaking any substantive reform of the sector and the regulatory arrangements under which it operates. Support for the Preparation of the Electricity Law 1.6 Assistance for the preparation of the Electricity Law and secondary regulations has been provided by ESMAP', the World Bank, and ADB. ESMAP supported the initial work, and complementary funds were obtained from the Institutional Development Fund, administered by the World Bank and managed directly by MOI. The Asian Development Bank (ADB) provided the funding to support the preparation of draft secondary regulations. 1.7 The World Bank, ADB, and the wider donor community are committed to continuing their support to the Government of Vietnam in advancing and finalizing an effective legal framework for the power sector. 2 Introduction and Overview 3 Key Steps - 1996-2001 o Preparing the basic outline of the electricity law (April-July 1996): The purpose of the law and the topics that the law should cover are identified. Discussion focuses on the concept of separate licensing and on the legal definition and effective separation of state management functions that are currently combined (that is, ownership, policy, and regulation). o Developing the structure of the Electricity Law and general discussion of content (August-October 1996): The decision is made to recognize the function of regulation in the law and to require separate licensing. Basic content and structure are submitted to the Steering Committee o Developing the main body of the Law (December 1996 - August 1997): Discussions are held with legal international and domestic legal drafting advisors. During this period, the main content of the law is developed in detail. The fifth draft of the Electricity Law is prepared and submitted to the Steering Committee. o Holding regional consultation workshops (September-October 1997): The first of a series of consultations is held. The Steering Committee conducts three workshops, in Danang, HCMC, and Hanoi. These consultations focus on domestic stakeholders (that is, provincial and municipal People's Committees). o Drafting and consulting with the international community (November 1997-March 1998): Based on the comments received at the regional workshops, a sixth draft of the law is prepared and a consultation workshop with the international law firms, foreign investors, and the donor community is held in Hanoi in March 1998. The feedback received is used to prepare the seventh draft of the Law. o Holding consultations with state management agencies (March 1998 - June 1998): MOI organizes a workshop to discuss the seventh draft of the law with State management agencies. These include the Department of Enterprise Renovation; State Pricing Committee; Government Personnel Department; Ministry of Finance; Ministry of Planning and Investment; Ministry of Labor; Ministry of Science, Technology and Environment; Ministry of Trade; Ministry of Justice; People's Supreme Court; and the National Prosecution Institute. The eighth draft of the Electricity Law is prepared. o Holding discussions with international regulators, and regulatory study tour (June 1998 - May 1999): The eighth draft of the electricity law is prepared, incorporating some elements of advice from two international regulators. The working group visits Argentina, Germany, Jamaica, Panama, Thailand, and the USA, studying different types of regulatory agencies; various processes of reform and change in ownership; models for organizing the power market; separation of state management functions; and methods of formulating electricity tariffs. The ninth draft 4 The Electricity Law for Vietnam of the Electricity Law is prepared in May 1999, after additional discussion with legal advisors and international regulatory advisors. o Consultations with government agencies and civil society (June-July 1999): The ninth draft is sent to all ministries and branches as well as to social organizations, among them the National Front of Vietnam; Labor Union; Youth Union; Women's Union; Union of Science and Technical Associations of Vietnam; and the Association of Consumer Protection. After getting around 30 key comments from the above organizations, the tenth draft is prepared. o Regional consultations (August-September 1999): MOI organizes a second series of regional consultations in Danang, HCMC, and Haiphong in August and September with the local People's Committees and large consumers. The working group incorporates some of the feedback and comments to prepare the eleventh draft of the law. o Round table on electricity legislation and policy (November 2000): MOI, with the assistance of the ADB and the World Bank, organizes a round table in Haiphong to identify issues constraining the finalization of the Electricity Law and to provide guidance for future changes to the draft Law. o Second round table on electricity legislation and policy (March 2001): Following the success of the November 2000 round table, a follow-up session is organized in Sapa focusing on issues identified as contentious during the November 2000 round table--specifically, the structure and responsibilities of an electricity regulatory authority in Vietnam, responsibility for tariff setting, and transition to regionally differentiated electricity tariffs. Secondary Regulations 1.8 In accordance with legislative practice in Vietnam, the primary electricity law is intended to establish key principles, institutional requirements, and guidelines to provide a stable legal framework for the sector, and leave implementation details to secondary regulation. For the legislative package to be reviewed by the Legislative Committee of the National Assembly, it is also necessary to prepare drafts of the key components of the secondary regulations. The working group determined that the main secondary regulations that had to be prepared for a comprehensive legislative package were decrees on: 1. Organizational structure and regulatory procedures of the regulatory agency; 2. Tariff-setting methodology and approval procedures; and 3. Rural electrification. Introduction and Overview 5 1.9 In mid-1998, work started on drafting the secondary regulations. The Prime Minister issued the Decree on rural electrification in early 1999. Although draft Decrees on the regulatory agency and tariff- setting methodology have been prepared, they have not been given sufficient attention owing to the uncertainties surrounding the future of the Law itself. Advancing the Electricity Law 1.10 MOI, in consultation with the World Bank (WB) and the Asian Development Bank (ADB), decided it was time to analyze why progress was slow and what could be done to overcome this problem. The parties agreed that the situation could best be analyzed in a open round-table discussion where participants would be able to express their opinions freely and work towards identifying solutions. It was therefore decided to conduct a facilitated participatory discussion that would achieve this goal. It was also expected that the outcomes of the round-table discussions could be used to develop recommendations to revitalize the law-drafting process, perhaps in the form of a policy guidance paper for consideration by senior policy makers. 1.11 Section 2 reviews the outcomes of the round-table discussion held on September 26 and 27, 2000. Section 3 is a power policy guidance document prepared by the World Bank and advisory team. Section 4 is a detailed legislative review of the fourteenth draft of the Electricity Law addressing specific issues that should be considered in the new phase of drafting. 2 The Round Table on Policy and Law Introduction and Objectives 2.1 On September 26 and 27, 2000, a round table was held in Halong Bay to discuss the reasons why the Electricity Law drafting process was not leading to a satisfactory final outcome, despite four years of extremely hard work by a very competent working group assisted by international legal and policy advisors. 2.2 The main objective of the round table was to have all participants from the main stakeholder agencies in the power sector work together to identify and analyze the policy decisions that must be addressed to prepare a satisfactory Electricity Law for Vietnam. 2.3 The round table represented a significant and innovative departure from the traditionally formal and constrained exchanges of opinions and ideas between government agencies, energy enterprises, and other stakeholders. Using a participatory discussion format with a facilitator, the thirty-five participants worked together to identify specific problems and possible solutions to clarify power-sector policy in Vietnam and prepare a good Electricity Law. 2.4 Two days of round-table talks clearly do not provide enough time to determine and discuss all pertinent issues, evaluate likely problems, and determine complete solutions. However, all participants agreed that the discussion was successful in identifying the priorities the Government should focus on in the short term. Round-table Format and Methodology 2.5 The round table was conducted using a participatory process based on Objective Oriented Project Planning (OOPP) methodology.3 Essentially it consists of the following steps: 1. Brainstorning on objectives 7 8 The Electricity Law for Vietnam 2. Problem analysis 3. Problem prioritization 4. Brainstorming on issues to be addressed in the Electricity Policy 5. Policy elements prioritization 6. Discussion on follow-up 2.6 The tool used for the discussion process can be described as structured brainstorming, employing such techniques as: Visualization of inputs 2.7 Visualization is achieved by limiting oral contributions and by requesting the participants to write their contributions on cards (10 cm x 20 cm), using flip-chart markers. The contributions are subsequently taped on a board or wall so that all participants can see them. Clarification of inputs 2.8 After receiving the inputs of the participants, the cards are read out loud one by one, and participants have the opportunity to ask questions for clarification. No judgment of the inputs is allowed--participants are expected to respect each other's opinions. To limit the oral discussions, participants are requested to speak briefly and to the point. Structuring of inputs 2.9 After the meaning of the inputs is clear to everyone, the cards are put in order. First, cards with similar or duplicate ideas are grouped together. Then, when possible, cards are grouped in specific categories, such as "Market Structure," "Technical," or "Policy." Finally, where possible and applicable, an attempt is made to establish the cause-effect relationship between the different cards. 2.10 The round table was conducted in two languages, Vietnamese and English, using sequential translation. This allowed everyone the opportunity to express themselves in their preferred language. The sequential translation, however, did slow the discussion. Mr. Enno Heijndermans, an expert on participatory discussion methodology, was the round-table moderator. Round-table Program 2.11 The round-table discussion was structured as follows over the two days: The Round Table on Policy and Law 9 Agenda Item rime Spen (hours) 1. Opening l/2 2. Introducing participants 1/2 3. Explaining the methodology 1/2 4. Brainstorming on power-sector objective< 1 5. Prioritizing objectives 1/2 6. Analyzing problems 5 7. Prioritizing problems 1 8. Identifying policy impediments 2 9. Follow-up and Closing 2 Round-table Outcomes 2.12 The participants at the round table worked together to: 1. Agree on the main objectives of the power sector in Vietnam; 2. Identify the problems that constrain the achievement of the main sector objectives; 3. Prioritize the problems constraining the achievement of the two main objectives; 4. Identify issues that should be addressed/clarified in the power-sector policy; and 5. Prioritize the issues that needed to be addressed/clarified in the power- sector policy. Main Objectives of the Power Sector in Vietnam 2.13 In order to reach a common understanding of the objectives of the electricity sector, brainstorming on objectives was considered necessary. Participants were asked to submit written answers to a question on objectives. The question posed to the participants was: "What do you think should be the main policy objective for the electricity sector in Vietnam?" 2.14 The cards with participant responses were read out loud and the opportunity was offered to ask questions for clarification. Next, cards were grouped in a number of categories. Cards with similar meanings were combined. The responses varied widely, from the very general, for example "sustainable development" or "socio- economic development," to the more specific, such as "optimize distribution system" or "appropriate tariffs." The contributions were classified into six categories: 10 The Electricity Law for Vietnam Cost Sustainability Reliability Efficiency Economic development Access/equity 2.15 There was a suggestion that the objectives be prioritized. However, most participants felt this would not be appropriate as the objectives proposed belonged to different objective levels. It was therefore decided to construct a simple objective tree using the categories noted above (see Figure 1 below.) The three-level objective tree showed that the highest level represented a national goal (socio-economic development), the middle level the sector goals (access and reliability/quality), and the lowest level enterprise goals (financial viability, technical and cost efficiency). 2.16 The objective tree showed clearly that there are two main sector goals - access and reliability (or quality). It was decided to analyze separately, in further detail, the problems in achieving these sector goals. Relevant enterprise-level problems would come up automatically; problems related to achieving the country-level goal are beyond the purpose of the round table. Figure 1. Objective Tree Socioeconomic I - Development - Reliable Eletrcity Supply Access to Electricity -. Good Quality Electricitly - Safe Electricity Supply t , f~~~~~~ VIable Electricity Supplier Technically and Cost-Efficient Financially Viabie Electrcity Suppier - Electricity Supplier The Round Table on Policy and Law 11 Problem Analysis and Prioritization 2.17 Problem analysis was a major focus of the round table, both in terms of its importance and the time it required. The two main sector problems were identified as "Access to electricity is inadequate" and "Reliability, quality, and safety of electricity supply is unsatisfactory"; then these were labeled the "core problems." Participants were asked to identify factors that had led to those problems. Participants were also asked to consider problems or issues that had caused these core problems and were asked whether the core problems were an effect of these problems or issues. 2.18 The participants were in the first instance requested to write just one problem (one problem per card) leading to one core problem (for instance, "Access to electricity Is limited"). Later the opportunity was offered to submit additional cards listing additional problems leading to the first core problem. The participant inputs were discussed and, where necessary, clarified. After addressing the overlap between different cards, the cards were grouped into categories for further processing. The same procedure was followed for the other core problem ("Reliability, quality, and safety of electricity supply is insufficient"). The participants brought forward 27 problems related to access to electricity and 29 problems related to reliability and quality of electricity supply. 2.19 The problems, having been identified and grouped, were organized into problem trees to establish the cause-effect relationships between responses (see Figures 2 and 3). These problem trees have been kept simple. With more time, the round table could have focused on developing a more detailed analysis of cause-effect relationships. The result, however, is sufficient to understand the key issues constraining the development of the Vietnarnese electricity sector. 2.20 After completing the problem trees, participants prioritized the problems using a voting procedure.3 The voting procedure overcomes a weakness of the OOPP methodology, which tends to treat all problems as equally important. 2.21 In the problem trees, the numbers in parentheses reflect the sum of the points that participants individually assigned to a specific issue or problem. The higher the number of points, the higher the relative importance of the identified issue or problem. Problem Prioritization - Access 2.22 The priorities related to access as perceived by the round-table participants were as follows: 1. Institutional arrangement not favorable or inadequate (83 points) 12 The Electricity Law for Vietnam 2. Insufficient investment (47 points) 3. Law on electricity not available (37 points) 4. Economic/financial investment not viable (15 points) 5. Insufficient ability to pay (14) 6. Insufficient policy mechanisms, including tariff and investment for power sector (14 points) 7. Poor institutional arrangements for nongrid and remote areas (13 points) 8. Lack of investment mechanisms (12 points) 2.23 It should be noted that the problem tree on access has six main roots. It is also relevant to look at the total number of points in each root. Below, the main access roots are given with the number of points received (out of a total of 269). 1. Investment (89 points) 2. Institutional arrangement (98 points) 3. Electricity law (37 points) 4. Ability to pay (14 points) 5. Willingness to pay (6 points) 6. Electricity policy (25 points) 2.24 From the above prioritization exercise, it can be concluded that the round- table participants considered investment and institutional arrangements the most important problems related to access, by a wide margin. Both the law and policy are also considered to be important issues. They came up as independent roots, but it is obvious that these problems are in fact a cause of many of the problems in the other roots. If these problems are addressed, a number of low-level problems in other roots can be overcome. Overall this makes both issues very important. Willingness to pay is not considered to be a major problem. "Insufficient ability to pay" may have received a relatively low priority because it is considered to be a given, and a factor the electricity sector cannot do much about. However, insufficient ability to pay may pose a major problem to attempts to increase electricity access. For instance, insufficient ability to pay may hamper attempts to increase further investment. As noted earlier, these issues could have been discussed at greater length at the round table and the problem tree rationalized further - something that was not possible owing to the lack of time. Problem Prioritization - Reliability and Quality 2.25 The round-table participants perceived that the important priorities related to reliability, quality, and safety were as follows: 1. Lack of regulator (47 points) The Round Table on Policy and Law 13 2. Poor (technical) quality of distribution system (43 points) 3. Monopoly (31 points) 4. Irresponsible behavior of customer-service staff-- monopolistic, bad treatment of customers and low quality (24 points) 5. Institutional arrangement not good (22 points) 6. No incentives or penalties for institutions or employees of institutions (18 points) 7. Not enough investrnent in technical equipment (17 points) 2.26 For the reliability, quality, and safety problem tree it is not so easy to identify main roots. In fact, most problems raised lead directly or indirectly to the market structure and the monopoly position of EVN. Basically, the problem tree indicates that there are serious technical problems (poor quality of the system, maintenance and operation problems) and that EVN is not able to solve these problems (insufficient investment) and has no incentive to do so (monopoly situation). 2.27 Cards related to the market structure totaled 149 points (out of a possible 274 points). This includes the following problems: 1. Irresponsible behavior of customer-service staff. Monopolistic, bad treatment of customers (24 points) 2. No effective pressure on EVN to improve performance (7 points) 3. No incentive or penalties for institutions or employees of institutions (18 points) 4. Lack of regulator (47 points) 5. Monopoly (31 points) 6. Institutional arrangement not good (22 points) 2.28 What the foregoing analysis and problem prioritization has confirmed is the need to clarify a number of policy areas and make critical policy decisions. This was felt by most participants, but in particular by the members of the Working Group on the Electricity Law. The next step in the round table was to identify the policy areas, topics, and issues which the participants felt needed to be clarified further by the Government. Figure 2. Access Problem Tree Access to electricity is limited _' _ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~T t Insufficient Institutional arrangement not Law on electricity not Insufficient ability to Insufficient Policy investment favorable or inadequate (83) available (37) pay (14j willingness to mechanisms, (47) pay (6) including tariff * . . + . and investment for power sector Consumers insufficient (14) Lack of technical Competition is not Poor institutional expectation to i e mechanisms/ introduced to increase arrangement for nongrid and get electricity capability (2) l the quality remote areas (13) cheap by governmenit (Investment) Insufficient Nb institution- Investment - Too much economic/ funds for or funds to sources are not investment financial not financially provide diversified (2)| required (5) viable (15) viable investment projects subsidies for General Lack of policy T I . I i electrification economic | on how access | Rate of return for | ,+ by supplier (5) reform is to be thedevelopment u r proceeding at a provided (8) I of rural | | Lack of f I | | TT slower pace of rural aproritethani electricity distribution mechanisr s Too high power Low productive sector reformn network is too mecanimstariff in use 3 l investment investment comparison with _ ( A | mobilization | | mechanisms | | actual income of T , I , ol (3) |zto (i2) m hi population No efforts to Tariff not high increase enough productive use | Do not know build-up Average sale tariff is Demand per new connected of cost with accuracy lower than marginal cost consumer very low Figure 3. Reliability Problem Tree I Reliability, quality, and safety of electricity supply is insufficient Higher cost Electricity quality does Frequent not meet standard inte"rruption's Irresponsible behavior of customers serVice staff. Monopoly/bad treatment of customers. (24). Poor (technical) quality of Lack of Consumption pattern is not distribution system (43) generation at appropriate lead to high peak hour (7) demiand in peak hour-(9) No ve perforean EVN to improve petfonmance (7) Unfair - ~~~~dispatch I t 1i | (monopoly) T ~~~~~~~Low awareness Inade,quate d* Poor op~era~ionLadk of modernof customers to - pres'sure -a-nd/or f . satisfo e and incentives for N i and mainitenance equiprnent - alf n ctvsfr |No ince'ntives or ||Lack,,of | penalties for regulator * IPowernetwork -behavior - - | institutiorisor (47) T i * . . - . | peoplein e institutions(l8) M1o (31 rrsponsIbTltiesI I - -oples - regation () Monopfly(3 n d , ' | | - - - | 1, - - | I ~Not enough II,I Low skill | | Nt r . IILow |i|nvestinent in T ' rs appwith-interestoof lackofprivate I-general |reg'ulations No - 1 electricity investrnent loT 6knoledge - - r 1(8) .enough || utilities(6) because noInstitutiona.arra tness training . regulat~~~~~~~~~~qipmnt (I7) no reut indelays (8)n-rgultiooo responsibilities t PPOP16's - -o~~~~~~espnsbiites f o awfo electricityd po ergsuplaier (7) uiiy(0 16 The Electricity Law for Vietnam Identifying Issues to be Addressed in the Power-Sector Policy 2.29 Completing the problem trees gave all participants a common framework of understanding regarding the main problems in the electricity sector and the need to have a comprehensive approach to address them. The framework enabled participants to brainstorm to identify the policy issues that should be addressed within a comprehensive government power-sector policy. For this purpose, verbal answers were requested to the question: "Which policy elements need to be addressed in the electricity policy?" The contributions were discussed, clarified, and written on flip charts. The participants identified 13 main policy elements: 1. Market structure 2. Role of other agencies (private/nongovermment) 3. Regulation (clarified as "effective" regulation) 4. Mechanisms for rural electrification 5. Natural-resource use policy 6. Investrnent stimulus 7. Energy efficiency 8. Role of National Committee on Energy Development 9. Tariff policy 10. Electricity export and import policy 11. Human resources development (training, quality standards, qualification) 12. Environmental protection 13. Transition policy (road map) 2.30 After the main elements were clear, each element was investigated in more detail. The participants were requested to answer the following question for each policy element: "Which aspects should be clarified in this policy element?" Again, after discussion and clarification the answers were written on flip charts. These responses are summarized in the following table. 2.31 To get an idea about the way participants perceived priorities of the policy elements, a voting round was held. (The voting methodology is described in Footnote 2.) The Round Table on Policy and Law 17 1. Market structure | 86 | I . Clarify corporate structure. * Identify who sells to whom. * Open market for generation first. . Open market for distribution next. . Keep transmission with government. * Clarify role of private sector. * Define pace of change. * Develop transition policy. 2. Role of other agencies (private/nongovernment) 9 | * Boundary with participation of foreign/private sector. * Should there be limits on private sector? * Should there be a 15 percent control limit? . Will EVN play a major role? . Will ownership diversify? * Limits on domestic state sector? * Joint ventures (state and private)? 3. Regulation (effective regulation) 55 2 * Electricity regulator? * Functions and responsibilities? * Boundary regulator and government? * Relation with other government agencies? . Composition? * Model of operation? * Separate state management functions from other functions. * Institution to house the regulator (very sensitive, very important) Should the regulator be located in a general department of energy outside state management? 18 The Electricity Law for Vietnam 4. Mechanisms for rural electrification 21 4 * Investment support from government. * Subsidies. * Mechanisms for rural electrification management (local authorities/cooperatives?). * Clarify responsibilities of EVN. * Reduce the burden on EVN. * Obligations of distribution licensees. * Check consistency of policy and law with old rural electrification policy paper! * Establish a clear policy on off-grid rural electrification! 5. Natural-resource use policy 4 | * Prioritize use of natural resources. • Prepare a policy on effective economic use. . Consider relative cost of using different resources for power. * Subsidize new and renewable resources (such as wind, solar, water). . Explore possibilities of nuclear energy. * Clarify mechanism to make trade-offs between resources. 6. Stimulate investment 4 7 * Statement on competitive bidding. * Government commitments to simplify time bound processes. . Policy on import of foreign equipment. * Government should protect investments. * Design of regulatory procedures. • Ownership policy. . Clear definition of private and public sector roles. * Tariff policy to ensure cost recovery and reasonable return on investments. * Government commitment to remove barriers. . Define security package available to protect investments. . Identify government support for implementation (such as rights of way, licenses, permits). . Licencing foreign projects are covered by foreign investment law. Separate provision on licensing in electricity law? 7. Energy efficiency |7 Zero (0) _ * Appropriate incentive structures. . Load management (timetable/plan). * Tariff policy for energy efficiency. . Incentives for using high-efficiency consumer appliances. The Round Table on Policy and Law 19 _ in I I 8. Role of National Committee on Energy Development 12 6 * Clarify relative role to state management and regulator. * Clarify legal status. * Define mandate and composition. . Location. * Define if it will have a full-time secretariat. 9. Tariff policy 55 2 * Uniform versus nonunifonnuniform tariffs nationwide. . Tariff framework fixed by government. * Tariff approval by government. * Does Prime Minister set end-user tariffs or ceiling price? * Cross-subsidy allowed? * Wholesaler to farmers: How to regulate or intervene? * Competition in generation and distribution: what will happen? * End-user tariffs. * Market mechanisms? * Contracts: price or price formula cannot be changed? * Principles in policy: enable to recover cost and return on capital. * Affordability: protection of low-income consumers. * Appropriate policy on subsidies and cross-subsidies. * Lifeline rate. * Changes in tariff and tariff structure to be coordinated. * Should policy state that subsidies decrease over time? * Who should bear the burden of subsidies? Should not be EVN. * Make subsidies transparent. 10. Electricity export and import policy Zero (0) T * Greater Mekong region: Reconcile link between commercial and political objectives. * Who is allowed to export/import electricity? Distribution companies near the border? * Who authorizes import/export? Is it necessary to authorize? * Guarantees? * Dispute settlement: Which law? * Equipment exports/imports. 20 The Electricity Law for Vietnam 11. Human resources development 2 * Where does the budget come from? * Identify key priorities. . Employee rights/obligation during transition. * Socialization policy? * Raise and diversify sources of finance. . Professional training information system (two-way communication). * Management training, training of scientific and technical staff. * Responsibilities of state, Government, and enterprises. . International cooperation: right for companies to deal directly with foreign parties. * Two levels: Education by state, education by enterprises. Address overlaps. * Regularly update curriculum to address technical changes. * Re-training. . Should government provide incentives for training? 12. Environmental protection | 2 | * Internalize environmental cost in investment decisions. . Covered by existing laws and decrees. No need for extra coverage in Electricity Law. * Clean technology for production. . Linkage to fuel choice (hydro versus coal trade-offs). * Should be consistent with international agreements (Mekong River agreement, Kyoto). * Cost of environmental standards needs to be considered (life-cycle cost). * Cost recovery policy. * To address the concerns of international financiers, include a specific statement that good environmental practices will be adopted. * Hydropower and flood control. 13. Transition policy (road map)' 23 7 4 . Indication of timetable for structural changes in sector (immediate,short, medium, long). * Timetable for change in tariff (level and structure). * When will the Regulatory Agency start operating? . Consistency (structure - regulation - tariffs). . Immediate next steps. * Role of government, regulator, transmission (in law). The Round Table on Policy and Law 21 2.32 As can be seen from the above, participants provided responses both in terms of specific questions and issues and in terms of recommendations and suggestions. Prioritization of the Policy Issues 2.33 The priorities, as perceived by the round-table participants, were very clear and extremely interesting. The summary results below demonstrate this. 1. Market structure 86 points 2. Regulation (effective) 55 points 2. Tariff policy 55 points 3. Transition policy (road map) 23 points 4. Mechanisms for rural electrification 21 points 5. Role of the National Committee on Energy 12 points 2.34 Clarity on market structure, regulation, and tariff policy were identified as key priorities that need to be addressed in the power-sector policy. Discussion on Follow-up 2.35 As the end of the round-table discussion drew nearer, participants decided to agree very quickly on a series of suggested next steps to assist the Electricity Law working group in preparing a new, improved draft of the Electricity Law. The participants suggested the following next steps (not in order of importance; no prioritization was done): 1. Government provides policy clarification and guidance to working group Govermment will provide clear policy guidelines on key policy issues to enable the Electricity Law working group to continue improving the draft law and secondary regulations. (Section 3 of this report provides a list of the policy decisions and associated guidance that the Government should strive to clarify and provide to the Electricity Law working group.) 2. National Assembly includes Electricity Law in the legislative approval process for 2001 The Steering Committee will submit its draft for review to the National Assembly in November 2000 to facilitate the inclusion of the Electricity Law in the Assembly's legislative schedule. Although the draft will probably be changed, this initial review was necessary to obtain a "slot" in the law-making procedures of the National Assembly. 22 The Electricity Law for Vietnam 3. Relevant agencies continue and intensify consultations on the draft Law Participants felt that the consultation process on the Electricity Law should continue its work at a greater depth. Although there have been wide regional consultations on the Law, it remains important to intensify the process of informal consultations in order to address specific issues. 4. Future round tables meet to address specific issues The round-table discussion process was found to be useful in focusing on specific questions. Hence, participants felt that additional round tables of a similar nature would also be useful to analyze and address specific policy issues and define a clear strategy. 3 Policy Guidance Document Purpose of the Policy Guidance Document 3.1 Based on the outcomes of the round table and the request of senior Ministry of Industry officials, it was decided to prepare a policy guidance document that would: 1. Summarize the key policy issues that senior government policy makers should address to provide adequate guidance to the Electricity Law working group to complete their task. 2. Identify priority policy issues that need to be decided immediately. 3. Recommend possible and/or preferred decisions that could be taken and provide a rationale for the recommendations. Structure of the Policy Guidance Document 3.2 The policy guidance document addresses four main topics: market structure (MS); regulation (RG); tariff policy (TP); and rural electrification (RE). In the following discussions, the first topic addressed is the one regarded as of the most immediate importance. Policy Documents Issued by Ministry of Industry 3.3 The following policy documents issued by the Ministry of Industry are provided in Appendix C. - The Power-Sector Policy Statement, Ministry of Industry, August 12, 1997. - Policy on Rural Electrification, Ministry of Industry. 23 Section 3. Policy Guidance Document Recommendation Rationale 1. Market Structurec - (MS) MS1 Guidelines on Long-term Market Structure The future evolution of the power-sector structure (over the The lack of a clear long-term vision of future power-sector next 10 years or so) needs to be broadly defined, with structure is the main impediment to implementing reforms indicative steps and time frames to facilitate the development that will enhance the ability of the sector to achieve its two of the supporting legal and regulatory framework. Many principal goals - increasing electricity access and improving documents prepared by EVN now reflect plans for generation power supply reliability and quality. These goals were separation and the creation of a power pool. In addition, steps identified by the participants at the power-sector policy and to revise bulk supply tariffs and establish consumer tariffs that law round table (see Chapter 2). The participants at the reflect actual distribution costs are being considered. It would round table were also of the opinion that clarification of the be appropriate to develop a common set of guidelines on future market structure was the highest priority issue to be power-sector restructuring plans that can be used to develop addressed by the Government of Vietnam. Participants and implement reforms in the power sector. These guidelines identified the preparation of guidelines on long-term market (also called the power-sector "road map") should be issued by structure as the number-one priority from a list of 13 issues. the government to clarify: (a) Re-organization of power-sector entities - separating transmission and dispatch from generation; corporatizing generation; increasing the independence of distribution companies; planning to create a power pool. (b) Principles for establishing transfer prices between generation and bulk supply, and to distributors. (c) Progressive shift from uniform tariffs to regionally differentiated tariffs (d) Role of the domestic and foreign private sector in generation and distribution - restrictions, if any. (e) A transition plan Section 3. Policy Guidance Document Recommendation - Rationale MS2 Agreement on Separate Licensing by Activity The licensing framework in the Electricity Law should require Separate licensing creates the basis for cost transparency by separate (that is, individual) licenses to be issued by activity for function within an electric utility like EVN, and provides the all dependent and independent accounting units of EVN and foundation for later corporate unbundling. While the draft other participants in the sector. Law currently allows for separate licensing, it allows a single license to be issued to an entity engaged in multiple functions. Therefore a holding company like EVN could, for example, be issued a single license for each different activity it is now engaged in. This would restrict the ability of the regulator to effectively supervise the power utilities - particularly EVN. MS3 Generation Separation- Action Plan The progressive separation of generation into an adequate number of generation firms is essential for the development of The monopoly of EVN in the power sector has been an efficient generation sector that can support fair competition identified as a significant constraint to efficiency by "for" the market (that is, via competitive bidding) and participants at the Halong Bay workshop. The nondiscriminatory dispatch in the immediate future, and "in" demonopolization of the generation sector can provide many the market (such as a power pool) when feasible. immediate benefits, specifically: A plan should be developed to: (a) Improve the incentives for generation plants to reduce (a) Convert all generation-dependent accounting units of EVN costs; into independent accounting units. (b) Remove bias in dispatch decisions by EVN; (b) Convert all independent accounting units into separate (c) Allow the purchaser (that is, EVN) to make efficient corporations, with management boards that are separate and fair power purchase decisions from new from EVN management boards. independent power producers. (c) Limit the capacity of each generation company and An integral element of generation separation would be to maximize the number of generation companies ensure that EVN and/or EVN-owned generation is restricted from developing new IPPs. Section 3. Policy Guidance Document Recommendation Rationale MS4 Transmission Consolidation Sector restructuring plans should require the consolidation of The transmission network is a critical monopoly service that the existing four transmission companies into a single EVN acts as the backbone of a cost-efficient and reliable power company. Initially, this consolidated transmission company system. The integrated management, operation, planning, could perform the functions of: (a) the grid owners; (b) and expansion of the network will yield significant dispatch (or system operator); (c) bulk power supplier (interim efficiency benefits. single buyer). The regulatory agency should at a later stage have the capacity l ~~~~~to require separate licensing of (a), (b), and (c). RG1 ~~~Establishing Regulatory Certainty and Stability in the Primary Electricity Law The creation of stable regulatory agency should be one of the The current legal drafting approach is to leave many of the primary objectives of the Electricity Law. To enhance the detailed decisions concerning the regulatory agency to be stability and credibility of this regulatory agency, the defined and established in secondary regulations. It is Electricity Law should reflect the following basic decisions: critical to recognize that stability of regulatory agency is key (a) The locationoftheregulatoryagency(pointRG2below to the financing and development of the electricity industry (a) The location of the regulatory agency (poit RG2, below) in Vietnam. The relative ease by which secondary (b) Decision-making powers of the regulatory agency (point regulations can be amended, compared to the primary Law, RG3, below) makes the secondary regulations inherently less stable than (c) Procedure of appointment of the Board/Commission of the the Law. Therefore, the basic decisions noted in RG 1 should regulatory agency (point RG4, below) be resolved and included in the primary Electricity Law approved by the National Assembly. (d) Functions of the regulatory agency RG2 Separation of Regulatory Agency The regulatory agency should be established separate from, and A key objective of the Electricity Law should be to create a independent of, the agencies that perform the ownership legal basis for a separate regulatory agency that can credibly functions (that is, State Management) and management supervise the electricity sector. Separation of this agency Section 3. Policy Guidance Document Recommendation- Rationale functions (that is, business management). Effectively, this from day-to-day supervision and control by MOI or any agency needs to be separate from the Ministry of Industry and other government body is absolutely critical to its future EVN. There are two main options: effectiveness. In order for a regulatory institution to be I . Argltraec(shaadicoaeoccredible in the eyes of all stakeholders, it must be able to 1. A regulatory agency (such as a directorate or committee)maeenigudcsoswhhcnotbrvredna established within the Office of Government. make meaningful decisions which cannot be reversed on a political basis. This is particularly important to investors, 2. A regulatory agency (such as a commission) established given the capital-intensive nature of the sector. as a separate government institution. It should be noted that the effectiveness of power-sector If the overall supporting framework for the regulatory agency is regulation was selected as the second-highest priority issue adequate, either option can be made to work effectively. We to be clarified by participants at the round table (Chapter 2). would, however, recommend Option 2. RG3 Decision-Making Powers of the Regulatory Agency For the regulatory agency to be perceived as credible it should The degree of actual independence that a regulatory agency have a reasonable degree of autonomy in either making or has is determined by its autonomy to make decisions based recommending important decisions (in such areas as tariff, on clear Government-approved guidelines and principles. investment, license enforcement). There are two options for While there is considerable sensitivity in giving a establishing its autonomy: Government regulatory agency decisionmaking authority in 1. The Government-appointed regulatory Commissioners or an area such as electricity tariffs, the importance of doing so 1.~~~~~~~ Th Goenetapitdrgltr should be considered carefully. It is important that the Board should make final tariff decisions (for example) based on regulator pocssde see as driv eonomic and transparent Government-approved principles and guidelines. regulatory process be seen as driven by economsc and technical, rather than political, issues. 2. As another example, the Government-appointed Commissioners should be able to make tariff recommendations to the Prime Minister, which the Prime Minister would approve and make effective. Under this option, the Prime Minister should be required to explain to the public any reasons for refusing to accept the regulatory agency's recommendation. Option I is the recommended option. Section 3. Policy Guidance Document Recommendation Rationale RG4 Appointment and Removal Processes for Regulatory Agency Commissioners or Board The procedures for appointment and removal of the Given the importance of the appointment and removal of commissioners or board of the regulatory agency should be regulatory commissioners or board members to the overall stated in the primary Electricity Law. Presently, the process of stability of the regulatory agency, it is suggested that these appointment and removal of regulatory commissioners or board issues be covered in the primary Law. members is covered in secondary regulation. Although the Prime Minister should have the power to appoint and remove commissioners, the powers of the Prime Minister should be defined in the Primary Law and not in secondary regulations (such as via prime ministerial decree). RG5 Rationalizing Role of State Pricing Committee The role of the State Pricing Committee needs to be Any confusion and/or overlap in the roles of the regulatory reconsidered and rationalized to reflect the organizational and agency and the State Pricing Committee (or other agency) legal reforms in the power sector. It is recommended that the with reference to setting electricity tariffs can undermine the role of the State Pricing Committee in dealing with electricity effectiveness of the transparent tariff-setting process tariffs be eliminated, and this responsibility be given to the new expected to be created. regulatory agency. There remains, however, the possibility that existing staff engaged in electricity and energy pricing issues within the State Pricing Committee could be transferred to the new regulatory agency. TP1 Clarification of Pricing and Tariff Principles Clear tariff principles should be defined to guide the legal The adoption and application of these broad principles drafting team in the immediate term, and assist the regulator would ensure that licensees are provided incentives to once the Law is passed. Essential pricing and tariff principles operate efficiently and that, if they do, they will recover Section 3. Policy Guidance Document Recommendation Rationale suggested are that prices and tariff should: their costs and ea a proper return on their investments. (a) be sufficient for an efficient licensee to recover the full short, efficiency should be encouraged and properly costs of doing its licensed business and earn a reasonable rewarded. On the consumption side, it is important that retumn consumers get information regarding the costs to the retu,n; licensee of providing increasing amounts of electricity. This (b) provide incentives for continued improvement in technical would correct situations in which, with cross-subsidies, and economic efficiency; neither the firms (i.e. the PCs) getting them through the (c) give proper price signals to consumers as to the costs that bulk-supply tariff, nor the consumers, receiving them get the increasing consumption imposes on the licensee's business; proper price signals to operate/consume electricity efficiently. Nonetheless, despite these important principles, (d) allow for a limited lifeline tariff to subsidize low-income there are some in society who do need assistance and users, while phasing out broader direct subsidies and cross- protection; a limited lifeline, targeted to those-truly in need, subsidies. would be reasonable. TP2 Progress towards Regionally Differentiated End-User Tariffs The structure and level of power tariffs are currently uniform The efficiency cost of continuing with uniform national nationwide. This policy has resulted in a number of major tariffs is extremely high and would undermine the ability of distortions: the power sector to increase access, improve reliability, and (a) Incentives for distribution utilities to operate efficiently and reduce costs. The social objective of providing cheap, minimize their costs are diluted. It also becomes difficult subsidized power to low-income consumers can be better to obtain accurate information on actual costs. addressed by means of a life-line tariff (see Point TP3). (b) Incentives for efficient utilization of electricity are weak. (c) Incentives for the distribution utility to extend supplies to unserved areas and consumers with low levels of consumption do not exist. (d) Incentives for the distribution utilities that receive an implicit cross-subsidy to purchase economical power from distributed generators also do not exist. Section 3. Policy Guidance Document Recommendation Rationale (e) Subsidies to low-income end-users are inefficiently targeted, leading to a misallocation of resources. A progressive shift to nonuniform regional tariffs should be considered immediately. A more detailed study may be appropriate. It is recommended that a nationwide average bulk- supply generation and transmission tariff be adopted for a transition period, allowing the main components of the end- user tariff to be kept equal across the nation. Since generation and transmission account for a large majority of overall costs, the differences in retail tariffs would reflect only the different distribution costs. The distribution margin could be based on actual costs, leading to differentiated regional tariffs that strengthen incentives for efficiency and minimize the distortions noted above. TP3 Establishing an Efficient National Lifeline Tariff Policy Lifeline tariffs are an efficient and easy mechanism to provide An efficient national lifeline tariff policy would achieve the subsidized power to low-income consumers. It is important, Government's social objective of subsidizing low-income however, to establish the lifeline level at an appropriately and rural consumers. limited level of electricity consumption. A level of 30 to 50 kWhrs per month is the suggested maximum lifeline consumption threshold. A higher threshold would serve as a disincentive to efficient consumption and may also provide unnecessary subsidies to higher income consumers. Section 3. Policy Guidance Document Recommendation Rationale 4. Rural Electrification - (RE) RE1 Establishing a Separate Agency for Rural Electrification Funding, Monitoring, and Implementation Support As the power sector is gradually restructured, with increasing It is important that the functions of funding, monitoring, and functional and corporate separation of the sector activities, it supervising the implementation of rural electrification will be necessary that the rural electrification planning and programs are not compromised in any way when the power implementation support functions currently performed by an sector is restructured. Intemational experience has shown integrated EVN be consolidated within a single entity. There that separate rural electrification agencies are an effective are two options: and efficient mechanism to perform necessary funding and a separate rural electrification agency. supervisory activities in an unbundled and commercial 1. Establish a separate rural electrlficatlon agency. sector. 2. Create the agency within the residual EVN structure, The actual construction of rural electrification grids and perhaps as part of the transmission company. supply should, however, remain a function of the Given that there is likely to be no appropriate way to link the distribution companies. rural electrification funding, monitoring, and implementation functions within the residual EVN (that is, transmission company), it is appropriate to consider Option 1 - a separate agency. The separate agency could be composed of existing EVN staff working on rural electrification to provide the required technical and planning capacity. It is important, however, that the rural electrification agency be defined in the Law as an agency that is separate from EVN. It is suggested that a study be undertaken to evaluate and decide the organization, structure, and functions of such a rural electrification agency. 4 Review of the Draft Law Introduction 4.1 This chapter contains observations, comments and suggestions based on our review of the fourteenth draft of the Law and three draft Decrees - concerning tariffs, the establishment of the regulatory agency, and licensing.4 The licensing Decree was recently drafted for the first time, while the others are presently undergoing redrafts, which we have not yet seen. Hence, some of our comments concerning the latter may need to be revised. 4.2 This review is intended to provide a basis for future changes to the draft Law and Decrees. While this review is not exhaustive, reasons for a specific suggestion or view have been provided where necessary. The nature of this chapter is to identify a number of issues that raise questions and cause concern. We would like to state at the outset that because the note has been focused primarily on critical commentary, it does not adequately acknowledge the substantial amount of thought and high-quality work that has gone into the various drafts. In addition, it should be noted that the fourteenth draft contains many improvements over the twelfth, which was the last one reviewed; to our knowledge, no thirteenth draft was circulated. 4.3 The comments may be broken down into relatively few categories. In some instances, the comments reflect different points of view about drafting and statutory language rather than differences about basic principles. These will be the easiest to resolve and, in some instances, may not be substantive at all. 4.4 In other instances, there may be agreement on what is or is not a question of basic principles. Often,. the disagreements concern whether the principles should be written into the Law; but the harder questions, we think, are those in which the principles themselves are questioned. The evolving role of State Management is an example. We can only reiterate that the principles in the Law must be consistent with the objectives of the Law or the two will clash and progress will be constrained. 33 34 The Electricity Law for Vietnam The Electricity Law in the Reform Process- The Importance of Clarity 4.5 The purpose of the Electricity Law (the Law) and the associated Decrees is to allow for, and to facilitate the implementation of, major changes in the power sector. Clearly, Vietnam cannot reform the sector without a change in law; but the Law itself will not be enough. Reform and restructuring have to be seen as lengthy, complicated processes that will require a well-crafted strategy, long-term commitment, and strong institutional capacity within both Government and the regulatory agency. This is an important lesson from other countries. 4.6 The legal environment that is pertinent to reform of the power sector is not limited to the Law and Decrees, but also to the laws associated with property rights, contracts, and the operation of companies, to note a few examples. These are not reviewed here, but clearly need careful consideration by the Government. 4.7 For reform to be successful in the long term, consistent and fair application of the laws is essential. It is this continuity that will provide the greatest comfort to the sector's stakeholders, both domestic and foreign. No one doubts that this is Vietnam's intention. But that is the long term. In the short term, before either the Government or the regulator has a track record, one has only the Law, the Decrees, and Government's articulation of its intended policies. In the short term, the structure and details of the Law and the Decrees have an extraordinary importance. Because one can look only to these documents - and cannot compare and contrast them now to several subsequent years of decisions and actions - it is particularly important to get them right. The written law is always important, of course, but never more so than when it is not yet possible to juxtapose the words of a statute with later actions taken pursuant to them. Vietnam is not unique in this regard. Balance between the Law and the Decrees 4.8 In any country, a balance must be struck between a law and its associated decrees. The law should be seen as the more firm and long lasting, whereas the decrees, being designed to implement the law, require some degree of flexibility over time. In other words, it is essential that the law contain the basic principles that will guide implementation; but, as circumstances change, so too must the approach to implementation. There is no hard line that distinguishes between what is and what is not a basic principle, although in most cases it will be quite clear. Consider the following example: Articles Five and Six of the Tariff Decree make it clear that tariff applications will be filed at three-year intervals, but with annual adjustments to cover some exogenous variables, such as foreign-exchange fluctuations. The principle is that there is a preference for multi-year tariffs and adjustments; but the choice of a three-year period should be open to change in light of later experience. Thus, the choice of the three-year Review of the Draft Law 35 time frame belongs in the Decree. However, the principle - the preference for multi-year tariffs - belongs in the Law. 4.9 It is accepted that there will be cases where some ambiguity is inevitable, but this should not be a deterrent to making distinctions when it is clearly possible to do so. It is suggested, therefore, that, in the drafting exercise, explicit decisions be made regarding basic principles and whether these principles should reside in the Law or a Decree. There is no benefit to articulating a basic principle in a Decree only, as the interpretation will be that the Government is reserving its right to make a change and that the principle is not immutable. The drafters should consider what is and what is not a basic principle. Basic principles should be articulated in the Law. They may of course be rearticulated in the Decrees; but if they are only in the Decrees, the interpretation will be that they may be revised. We are cognizant of the fact that Vietnam - as every country - has its own conventions vis-a-vis legal language and drafting. This is an area, however, where some compromise would be useful. At the least, in the decision as to where or when to compromise, the costs of not doing so should be an explicit consideration. The consequences of such interpretations should also be acknowledged and considered. As there is much detail in the draft Decrees, to a large extent the allocation between the Decrees and the Law will be more of a drafting than a conceptual exercise. Specifi'c Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft 1. State Management functions In Vietnam, the term State Management is used Suggested Language for Chapter X, Articles 51 Defined and Assigned to describe the Government's different and 52 The functions of State roles/activities in any given sector. State Management shall be clearly Management functions in the electricity sector Article 51: Contents of State Management of deanaedmand chatlegoried,andy are detailed in Articles 51 and 52 of the draft Electricity Activities responsibility shall be assigned to Law. While the manner in which the State "State Management of electricity activities separate Government agencies. Management activities are described therein consists of: may be appropriate when the sector is entirely (1) Setting out national energy policies and in public hands and no regulator is in place, it is strategies. This will include: clearly not appropriate when there is a desire to (a) Establishing guidelines for national and have private investment, clearly defined local power development in accordance licensee rights and obligations, regulatory with socio-economic development oversight, and an increasingly competitive policies for national defense and marketplace. Specifically, it is important that security; State Management functions be assigned to e ty, separate government entities in a manner that (b) Considering the need for new legislation does not lead to overlapping responsibilities in the electricity sector; and unclear accountability or conflicts of (c) Engaging in international cooperation interest between responsibilities. (In fact, the and bilateral trade agreements related to need for clear separation of State Management energy; functions was identified as one of the top (d) Organizing, implementing, and priorities by Vietnamese officials at the Halong maintaining a national statistical Bay workshop in October 2000.) database on electricity activities; Based on Vietnam's current conditions, with (e) Such other activities as may be required state ownership dominating the sector, there are for the development of policies and three distinct categories of State Management strategies. activities: policy, ownership, and regulation. (2) Performance of ownership and Regulation is a State Management function that management functions related to state- should not conflict with policy-making and owned enterprises in the electricity sector. ownership functions. While the regulatory This will include: agency should be accountable and provide (a) Estahlishina ownershin and asset reports on its activities and decisions to (a) Establishing ownership and asset designated Ministries (perhaps MOI and/or the management policies for state-owned Office of Government), it should also have the companies. legal authority to make final decisions. That is, it should be able to do more than make (b) Nominating management boards of recommendations, which may be modified by state-owned companies. other agencies with inherent conflicts of interest (c) Such other activities as may be required and/or less capability to understand and deal for the performance of ownership and with the issues at hand. Put another way, management functions. accountability to Government (or a Ministry) (3) Regulation of electricity activities in does not mean that Government controls the accordance with Chapter XI of thisLaw." decisionmaking process or the final outcome. Article 52: Allocation of State Management We appreciate that the reform of State Responsibilities Management functions is a significant "I. The Government's responsibilities for organizational challenge for Vietnam and that State Management shall be carried out in a these changes will be gradual and have a uniform manner across the nation. Vietnamese character to them. A large part of 2. The Ministry of Industry shall be the challenge in the electricity sector lies in responsible for coordination with Ministries, separating and allocating these State ministry-equivalent institutions, and institutions Management functions to different entities in a under Govenmment control in establishing the manner that ensures both that there will be no national energy and policies and strategies, conflicts of interest and that decision making identified in Article 5 1, Clause (1)(a). will be based on transparent rules and procedures. These are key requirements for the 3. The performance of ownership and provision of a regulatory environment that management functions related to state-owned gives confidence and comfort to all assets (Article 51(2)) shall be in accordance stakeholders. Articles 51 and 52, as well as with the Law on State Enterprises (20/4/1995) Chapter XI, need to be reconsidered carefully and associated Decrees. based on the foregoing and forthcoming 4. The regulation of electricity activities discussions. shall be implemented in accordance with Chapter XI by the Electricity Regulatory Agency created by this Law. Specific Recommendations for Modifying the Fourteenth Draft of the- Electricity Law Recommendation Explanation Suggested Language, for the Draft 5. People's Committees at all levels shall perform the functions of state management of electricity activities in their territories according to provisions of this Law and to any delegation stipulated by the Government." 2. Regulator to be Created as a The main characteristic of a proper regulatory Suggested Languagefor Chapter X, Articles 53 Separate Decision-Making agency is that it be a decisionmaking body that ... Entity In view of immediate-term operates based on clearly articulated procedures Article 53: Establishment of Electricity constraints related to capacity and and rules and in accordance with overall Regulatory Agency staffing, it is suggested that a Government policy (another separate State ,There is hereby established a public legal transitional period be defined in Management function). The Government will, entit y esthe alpubic R egal the Law (of no longer than 12 to from time to time (as spelled out in the Law) Agency (ERA). The Goverment shall ensure 18 months), during which a appoint appropriately selected, qualified the ERit ReGoryAenc s. separate office in MOI would members to the regulatory agency's governing thattheElectricityRegulatoryAgencyis develop regulatory skills and board (or Commission). In doing so, the (b) The Electricity Regulatory Agency shall be capabilities, before being Government entrusts them with the obligation created as a separate entity no later than a transferred to a new, separate and responsibility to make decisions that transitional period of eighteen (18) months agency. The creation of a separate balance the interests of consumers, investors, from the enactment of this Law. (c) During regulatory agency and the use of enterprises, and Government. The purpose of the transitional period, the Ministry of such a transitional strategy would creating such a regulatory agency by Law and Industry shall be responsible before the be in line with the consensus that establishing a clear, transparent decisionmaking Government to perform, as Government emerged at the participatory process is to achieve an effective may require, such activities as staff workshop at Sapa in March 2001. decisionmaking process that appropriately selection, training, and other activities balances the important interests of all necessary to implement the Electricity stakeholders in the sector. A decisionmaking Regulatory Agency." process that is both effective and credible to all Article 54: Objectives and Functions of the stakeholders regarding such matters as licenses, Electricity Regulatory Agency tariffs, and investment is after all a major "I. Subject to this Law, the ERA shall have the reason for implementing reforms in the following principal objectives: electricity sector -- and also a key reason for (a) to create, promote, and preserve efficient preparing a new Electricity Law. industry and market structures, and to Decision-Making vs. Recommendation- ensure the proper utilization of resources Making Regulatory Agency for the provision of electricity services; As currently conceived in the fourteenth draft (b) to maximize access to electricity services of the Law, the regulatory agency would make by promoting and facilitating consumer some final decisions (conceming the issuance connections to distribution systems in and enforcement of licenses, for example), but both rural and urban areas; in other important areas would be a (c) to ensure that an adequate supply of recommendation-making agency providing electricity is available to consumers; advice and recommendations on specific issues (d) to ensure that the prices charged by to a higher authority which will make the final licensees are sufficient to allow the decision. For example, it is evident from a licensees to finance their activities and to review of the Tariff Decree (Article 2) and the allow for reasonable earnings for efficient Law that the Government (through the Prime operation; Minister) provides final approval for consumer (e) to ensure safety, security, reliability, and tariffs recommended by the regulatory agency. quality of service in the production and However, the regulatory agency is in turn made delivery of electricity to consumers; responsible to the State Pricing Committee in developing these consumer tariff (f) to ensure that regulation is fair and recommendations. The tariff decree also balanced for licensees, consumers, requires the regulatory agency to set generation, investors, and other stakeholders in the transmission, bulk power supply, and electricity sector. distribution tariffs based on the Govemment's 2. For the furtherance of the objects referred to decision on consumer tariffs. The possible in Clause 1, the ERA shall perform the confusion and uncertainty regarding tariff- following functions: setting standards and principles applied by (a) Promote and implement competition and these different agencies is clear to see. First, it private sector participation when and is not evident that the State Pricing Committee where feasible; is required to use the same tariff principles, (b) Establish or, as the case may be, approve standards, and procedures applicable to the aprrit orathe cas ay safety, regulatory agency. Second, it is also possible prop reiate operang codestandasa that the Government may make final consumer security reliaty anduality tstand decisions based on considerations that are not (c) Establish appropriate consumer rights and .1. .~. -.1 l l. . obligations regarding the nrovision and Specific Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft the same as either the regulatory agency or the use of electricity services; State Pricing Committee. It should be evident (d) License and regulate persons and entities that this procedure for decisionmaking on an engaged in the generation, transmission, issue as important as electricity tariffs is distribution, and supply of electricity; unlikely to yield satisfactory results. We (e) Aid and advise stakeholders in matters should also add that this sort of entity would not relating to electricity generation, be a power-sector regulator as the term is used transmission, distribution, and supply of elsewhere. electricity; We are cognizant of and appreciate that in Vietnam, given its history and traditions, the Ase .co rsgi te e immediate realization of a truly autonomous g seo vernmet, G decisionmaking body would be difficult - even (g) Advise Government, as the Government if this were required by law. It is most likely may require, on matters related to that, in the near term, until the Agency has a electricity systems and services; track record, the commissioners would inform (h) Participate internationally, as may be and consult with senior Government officials required, in matters related to electricity and Ministers before making major decisions. services; Importantly, however, regardless of any such (i) Arbitrate and mediate disputes among consultations, these decisions would be those licensees; reached by the Regulatory Agency through a (j) Issue guidelines on such matters within its transparent, rules-based process, with the authority as it determines would be in the Regulatory Agency taking responsibility for the public interest; decision. If this is not so, the legitimacy and credibility of the Regulatory Agency would be (k) Undertake such other activities as may be at risk, creating a host of problems--not least required to fulfill its responsibilities increasing the difficulty of diversifying the pursuant to this Law. ownership of sector entities, which is a key Government policy objective. There is a need 3. In the discharge of its functions, the ERA for Vietnam to break with tradition in the shall consult from time to time, to the extent it establishment of a decisionmaking Regulatory considers appropriate, such persons, groups of Agency, just as it has made the break with persons, or entities who are likely to be affected regard to the organization of the power sector bv. the decisions or orders of the ERA. - ~~~~~~~~~ X Speifl Reomndtosao oifigth oreet fatth itself. Both are important; and neither is including, but not limited to consmers, sufficient on its own. licensees, Government, potential investors, and The Issue of Regulatory Agency Location other interested parties. Issues concerning the location of the Regulatory Agency are proving to be a 4. To achieve transparency and accountability challenge to address. For a variety of reasons, in the functioning of the ERA, the ERA shall the discussion has become focused on whether (a) Publish annual reports of its budget, use of the Regulatory Agency should be within an funds, and activities for review by the existing body (such as MOI) or within a yet-to- Government; becreated body, such as the National Energy (b) Ensure that all decisions and orders of the Committee. As this discussion has sometimes ERA: overlapped with the concept of regulatory- agency accountability, it is useful to first make (i) contain the basis for the decision or order; the distinction between location and (ii) be properly recorded in writing; accountability. (iii) be accessible to the public at reasonable Accountability to Government means that the times and places. Agency is responsible or answerable for its (c) Provide such other reports and information activities, how it spends its budget, and so on; concerning its finances and activities as the this is important for all Government agencies. Government may require." A aegulatory agency is typically accountable to institutions such as parliament and/or specific ministries. Regulators are also accountable, albeit in a different way, to the public (consumers) and investors (enterprises). In practice, accountability is achieved through such means as: (a) submitting annual reports on its activities and expenditures to the relevant ministry; (b) adopting procedures that allow for and facilitate the participation of both interested parties and the public; Specific Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft (c) providing explanations and justification of its decisions to all stakeholders -- Government, consumers, and enterprises - by putting its decisions, including the evidence relied upon and the rationale, in writing; (d) appointing, by Government, of a governing board (for instance, commissioners) of the Regulatory Agency; In summary, accountability of the tegulator is not achieved by its 'location' within one ministry or another. Rather, accountability stems from, inter alia, reporting on its activities and expenditures, and justifying and publishing its written decisions. Hence, accountability and location should be treated as separate concepts. It would not serve Vietnam's long-term interest to locate the Regulatory Agency within MOI, or a future policy-coordination entity such as the National Energy Committee. In both instances, the Regulatory Agency's functions would conflict with the policy and ownership roles of MOI and NEC and would undermine the necessity to establish the Agency as a decisionmaking entity. The Strategy for the Next Draft of the Electricity Law The immediate question is how the establishment of the Regulatory Agency should _ he addressed in the next draft of the Electricitv SpcEclM ctoi MoadatXon ,tb 1Sugte ci esLW 't: - ,r - Law. There is a view in Vietnam, which acknowledges the need to create the Regulatory Agency as a separate entity, but feels that establishing it within MOI would be an appropriate interim solution. The rationale offered is that this would not require the immediate creation of the separate agency, but would, instead, allow for a more gradual and incremental transition to it. While this approach has merits, our view is that using MOI as the vehicle for a smooth transition to a separate regulatory agency may be problematic and difficult to achieve in practice. The general concern with interim solutions is, of course, that they may become permanent, particularly in the absence of a clear way forward. The specific concern in this instance is that, even if one assumes that MOI may be reasonably well positioned for the role while the sector is basically state owned, the opposite is the case when ownership and management become diversified. In our view, taking this interim solution would pose substantial risks. The better approach, therefore, would be to create the entity to house the regulator at the same time that the Regulatory Agency is established. We accept that continuing the policy discussion on the location of the Regulatory Agency might delay the finalization of the Electricity Law. Our preference, which we have stated several times. is that the fifteenth draft of the Law. Specific Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation E "xplanation Suggested Language for the Draft provide for the creation of a separate Regulatory Agency. This is the proper vehicle for the implementation of Vietnam's long-term development policy. In the circumstances, however, we recognize that one could, instead, specify a clear transitional period, ideally no longer than 12 to 18 months, during which a separate office in MOI would develop regulatory skills and capabilities, before being transferred to a separate agency. If accepted, this interim period and the activities to be undertaken during the transition process should be defined in the Law. If not, the concerns that the interim arrangement would become permanent would be exacerbated. In addition, having a specified time period in the statute would avoid the need for a change in law to effectuate a change in location. Simply put, this would not be a good idea. 3. Recognize Private Article 4 encourages individual and institutional Suggested Language for Article 5, Clause 1: Ownership Explicity investment in the sector. Article 5 gives the "Domestic and foreign individuals and The law should state more State control over transmission and dispatch. institutions shall be permitted to have specifically that private-sector Article 5 should also state that domestic and ownership, including majority ownership, and management and control (via foreign private-sector individuals and management control of generation, distribution, equity ownership) is permitted for institutions may have ownership and and bulk and retail supply." activities other than transmission management control over power-sector and dispatch. (But see activities other than transmission and dispatch. Recommendation 4). However, as pointed out in Recommendation 4, the Law should permit private ownership of transmission in some selected circumstances. .piciflc'RecingitheEourteeTe copni n lagntuagesoultd;bawe _-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ coordinated with that in Recommendation 4.) 4. Permit Ownership of Special Private ownership of transmission lines - SuggestedLanguagefor Article 5: Purpose Transmission Lines particularly interconnections from plants to the "Notwithstanding Clause (...Reference to Private-sector ownership of certain main grid -- are likely to be quite useful and 'Nommendin ... Renerencesso transmission lines and associated beneficial. The connection of an IPP to the grid recommendation 3), independent transmission tranmision ine andassciatd b anindeendnt tansissin cmpan isonefacilities may be constructed, owned, operated, equipment (such as from an IPP by an independent transmission company is one financed, and maintained by domestic or to the grid) should be explicitly such possibility. It Will not be a good idea for foreign individuals or institutions, subject to allowed. (This should be one to consider a maJOr evacuation line from aagemnsifnywthoerlcsesr allowe. (Ths shold begenerating station to be part of generation; nor agreements, if any, with other licensees or coordinated with Recommendation sute onl viation for of pration consumers or both, and subject to a license 3.) should the only viable option for the provision from the Electricity Regulatory Agency. The of the transmission line be the principal censee shall not have responsibilities for any transmission licensee. Licenses for such transmission can be given to the private sector system operation or dispatch, unless the license for a limited purpose: to construct and maintain specifically grants such responsibilities." the line. System operation would remain with the principal licensee. As we see it, the primary objective of the Vietnamese Government is to retain operational control of the system. If so, that objective can be satisfied without requiring state ownership of each and every transmission asset. 5. Government Financing of It must be clear that investments in, for Suggested Languagefor Article 5, Clause 2: Social Obligations example, rural, mountainous, and island areas "The cost of Government's social obligations The Law should be explicit that that are required to meet the Government's in any area shall be financed by subsidies paid the cost of the Government's social obligations, but which are not from the Government's budget. Licensees shall social obligations will be financed commercially viable, will be financed by not be required to finance such social from the Government's budget. Government. If there is any likelihood that obligations either directly or indirectly, through licensees will be required to undertake this obligecatinismeithe drclyowrindiety thertofrotugh financing, either directly or indirectly, this willurn ___,_ ___ AIAM________________ - 1. . on licensee investments. For the purposes of Specific Recommenldations for Modifying the Fourteenth Draft of the Eleetricity Law Recommendation Explanation Suggested Language for the Draft make it difficult to diversify' ownership. this Law, the cost of social obligations is the It should be noted that the Tariff Decree has amount needed to cover all costs, including a provisions of concern in Article 25 (a), reasonable rate of return, over and above that allowing for a subsidy to be provided by which can be recovered from the consumers lowering the licensee's allowed rate of return through tariffs." and, hence, reducing its revenue requirement and tariffs. It goes almost without saying that the possible implications for the diversification of ownership where there may be a unilateral determination to reduce returns are likely to be substantial. If this policy is retained, it will - at the very least -- further enhance the need for Government comfort to be provided to investors. This approach to the provision of subsidies to certain customers is simply improper. 6. Competitive Bidding for Article 5, Clause I is quite clear that it is Suggested Language for Article 5 "Where New Supply intended that a competitive environment be power is acquired under a long-term agreement, It should be explicit in the Law created. It should also be clarified that such as a Power Purchase Agreement, by any that competitive bidding is competitive bidding will be required for long- bulk or retail supply licensee, the Electricity required whenever long-term term contracts, as this will be a benefit to Regulatory Agency shall require that the power PPAs are a means for acquiring consumers. be purchased in an open, transparent, and power. competitive manner, subject to its review. However, if the Electricity Regulatory Agency determines that the electricity market is sufficiently competitive, or that for other reasons the circumstances do not require such a review, it may fashion an alternative process, if any, that, in its judgment, is proper." -' M Recormmenda-tion i. plainSgaettodangua th hDiaftK-'-- 7. Remove Reference to the There is a problem with the requirement in the Suggested Language for Article S, Clause 4: Term "Road Map" law of a "road map," which is a document (or "The Government shall provide guidelines and The reference to a "'road map" in product) rather than a process. The imperative direction as may be required for the Article 5, Clause 4 should be is for the Government to make some decisions implementation of the management and removed. in the interim concerning the implementation of organizational reforms in the power sector reforms. These decisions could be in the form identified in Clauses I and 2 of this Article." of guidelines, issued as the reform process evolves. Furthermore, the term "road map," while useful for discussions within an informed group of experts, is not a commonly used term. 8. Change the Terms "Utility" Chapter II of the draft Law proposes to license and "Utilities" to "electric utilities." There is no concern of "Company" and substance with the drafters' evident intent, but "Companies" this terminology is not common where there are The terms "utility" and "utilities" licenses. The problem is that the term "utility" used when referring to separate is often construed to be an organization that is licensees are ambiguous and vertically integrated with a statutory set of should be changed to "company" responsibilities. The question inevitably arises and "companies." as to whether, for example, a distribution licensee would have responsibilities in addition to its license responsibilities because it is also a "utility." The problem is not one of substance; it could be resolved - and ambiguity avoided - if distribution "companies" rather that distribution "utilities" were licensed. In other words, any company that engages in "Electric Activities," as defined in Article 3, would need a license. The law would then refer to the present "distribution utility licensees" simply as distribution licensees." This change would be Speciflc Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft more in line with legislation in other countries and, hence, would be more easily understood by investors and their advisors. 9. Simplified Licensing for Small systems, because they not only small Suggested Language for an Additional Clause 3 Small Systems butoften remote, may find the obligations of the to Article on Conditions for Obtaining a Special licenses and licensing major licensees too burdensome, as well as License: arrangements for small systems in inapplicable. The Electricity Regulatory "Notwithstanding Clauses I and 2, the rural, mountainous, and island Agency should be able, inter alia, to issue such Electricity Regulatory Agency may establish areas should be available. A systems simplified licenses, with simplified simplified licenses and license requirements simplified license would be reporting requirements, a simplified application and simplified procedures for license preferable to exemptions. process, and a simplified approach to tariff applications and other matters for small setting. systems, including those in rural, mountainous, In these circumstances, a simple license is and island areas." preferable to an exemption with conditions, which would be very much like a license, but without the Law's protections against arbitrary amendment or revocation. After all, to an investor or service provider, the loss of an exemption would be as devastating as the loss of a license. Moreover, if the Law provides more protections for an investor with a license rather than an exemption, arranging financing will be easier with a license. 10. Licensing Load Dispatch When the ownership of power sellers (IPPs) Suggested Language to Supplement Article 15, Load dispatch should be a licensed and power purchasers is diversified, there needs Obligations of Transmission Utilities: activity. to be a proper way to resolve disputes regarding "(I) Subject to such terms and conditions as such matters as the order of dispatch of power the Commission may fix in the license, a plants and power curtailments in times of transmission license shall authorize the shortage. An entity that is state owned and licensee to do any one or more of the iEoI ( i o f l_ _ _ _ d _ _ _ _ _ _ _ _ _ _ __g_ unlicensed, such as the National Load Dispatch following as may be specified in the Center (Article 17), will be a problem for the license private sector, particularly while Government (a) To carry on grid construction, operation, has a majority ownership interest in any and maintenance of transmission facilities generation or distribution. The following within Vietnam; suggested language would not require a (b) To carry on system operation including, separate license for dispatch (system operation) but not limited to the following; while it is a bundled function, but would allow (i) generation scheduling, commitment, and the regulator to license the function when, in its dispatch; judgment, a license may be required. (ii) transmission scheduling and generation outage co-ordination; (iii) transmission congestion management; (iv) power pooling; (v) international transmission co-ordination; (vi) procurement and scheduling of ancillary services and system planning for long term capacity; (vii) such other activities as may be required for reliable and efficient system operation. (c) To operate a power exchange including: (i) energy accounting and settlement; (ii) establishing and maintaining standards and protocols for the setting of electricity prices; (iii) publishing prices and other market information; (iv) such other activities as may be required for a reliable and efficient power exchange. (2) Should it determine that it is in the public interest, the Electricity Regulatory Aaencv mav. reouire that the functions Specific Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft identified in subsection (1)(a), (b), and (c) be separately licensed. If any of the functions identified in the foregoing are at any time provided by a separate company or other entity, that company or entity must obtain a license." 11. Licensing Generation in Under Article 21, large capacity end-users can Suggested Language to be Added to Article 21: Special Export Zones purchase power directly from generation "Generation and associated sales of electricity Generation and electricity sales in licensees; self-generation without sales is in industrial or export zones to entities that are industrial and export zones should exempt from a license requirement (Article 38) not large-capacity end-users may be allowed require a license. as long as the size of the power plant is below only if the Electricity Regulatory Agency the level that will be set from time to time by determines that there will not be an adverse MOI. Both of these Articles will have the impact on other customers. If such sales are effect of removing industrial load from the allowed, it shall be a licensed activity and one system, which will have a financial impact as or more licenses will be required, as the long as industry cross-subsidizes the other Electricity Regulatory Agency may determine." consumers. Generation and associated sales in industrial or export zones will have the same effect, and may also include small and medium industry. Therefore, careful thought should be given to these combined policies, at least while industrial tariffs provide inter-consumer cross- subsidies. As the fourteenth draft is now constituted, third-party electricity sales in industrial or export zones are not specifically permitted, unless the end-user is a "large capacity end- user" as may be identified from time to time by MOI pursuant to Article 21. SpedlRcomndtin_frM iyhingih I ouirteentH-Wraft 6f the,ElectriciiVttWa-" ,., __________ ________________ R4,:~e N ¢> Recoffinndatiodn II ' ~________ Sggse~Ln 12. Clarify Provisions for The provisions for amendments and Suggested Language to be Added to Article 43: License Amendment modifications will be very important to "For purposes of this Article the term "in The Law's provisions for the investors, whether domestic or foreign. No accordance with the capability" shall mean that amendment and modification of investor will want his or her obligations to be it is within the management capability of the licenses should be clarified. changed, particularly if the added obligations licensee and that the licensee shall be entitled to are either not remunerative or are beyond his or recover all costs, including a reasonable rate of her capabilities. However, although the law and return, for the additional expenditures required decree recognize these concerns, there is a to satisfy the amended or modified license specific suggestion for some enhancements to responsibilities." the draft below in our Comments on the Law. Briefly stated, the proposed change would clarify that the licensee would be entitled to recover the costs associated with the new responsibilities, including the proper rate of return. 13. Specify Multi-year Tariff It is better to specify the principle of multi-year Suggested Language for Article 46, Clause 1: Adjustments in Law tariff adjustments rather than impose a specific "Electric utilities shall establish a multi-year The law should express a three-year tariff adjustment better. The exact tariff and annual tariff adjustments to submit to preference for multi-year tafiffs number of years between adjustments would the Electricity Regulatory Agency. The rather than the specific best be in the decree; alternatively, it could be duration of the multi-year tariff shall be requirement of three-year tariffs; left to the discretion of the regulator. There determined from time to time by decree the specific details (number of may be, in the future, a need (or desire) to have, (alternate: by the Electricity Regulatory years) should be in a decree. say, five-year tariffs for some or all distribution Agency)." utilities. Anything other than three years (for (Note: It should also be clarified that Article 46 any utility) would not be possible (given the does not apply to PPA-derived tariffs.) fourteenth draft) unless the law itself were to be changed. 14. Ensure Adequate Protection All investors recognize that there are instances Suggested Language to be Integrated into against License Revocation in which performance may be so inadequate Article 46: Specific Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft More protection is required in the that revocation may be required. But before "(') Upon: Law regarding license revocation. they invest, they need to know what procedure (a) receiving a complaint from any will be followed and that they will be treated cnue,cnue soito,o n fairly, consumer, consumer association, or any fairly. association of traders or industrialists; It is evident that there is recognition that a fair (b) receiving a complaint from any process for evaluating and deciding upon such (b) pany or peascomplaintefrom any matters must be developed. The draft law company or person involved in the (Article 43), however, would leave these generation, transmission, distribution, or procedures to be delineated in a Decree. It is supply of electricity; our view that these procedures should be (c) its own initiative; written into the Law, given their importance to The Electricity Regulatory Agency may investors and, hence, to the goal of diversifying inquire into the conduct or functioning ownership. Even though investors understand of any licensee in carrying out its that there are circumstances in which obligations under the Law, Decrees, or performance has been so inadequate that the the terms and conditions of the license. licensor must have the authority to revoke a (2) Subject to this section, and after an license or impose other strong penalties, they inquiry, including an opportunity for the properly require protection against the licensee to show cause as to why the possibility of unfair procedures and would, also license should not be cancelled, the properly, take more comfort from having those Electricity Regulatory Agency may provisions in the Law rather than in a Decree. cancel any license if in its opinion- Suggested drafting language is provided in our (a) The license was issued through fraud or Comments on the Law below, the misrepresentation or non-disclosure of a material fact by the licensee; or (b) The licensee has willfully or unreasonably violated Articles 13, 14, 15, 16, 18 ofthis Law; or (c) The licensee has failed to comply with any term or condition of the license, the breach of which is expressly declared by such license to render it liable to mnienUafimn U~~~h DaMft th'E'I?lctrictyLa cancellation; (d) The financial position of the licensee is such that the licensee is unable to fully and efficiently discharge the duties and obligations imposed on it by its license Provided that the Electricity Regulatory Agency must determine that the licensee will not be able to cure its financial problem within a reasonable time, given the circumstances. (3) Before canceling a license as per Clause 1, the Electricity Regulatory Agency shall notify the licensee in writing of its intention to cancel the license concerned and the reasons for doing so, and may allow the licensee an opportunity to explain or to demonstrate that circumstances have changed such that cancellation may no longer be warranted. (4) If, at the end of the inquiry and of any further opportunity to be heard, as per Clauses 2 and 3, the Electricity Regulatory Agency is satisfied for any reason specified in Clause 2 that it is in the public interest that the license concerned should be revoked, then the Electricity Regulatory Agency may, by notice in writing to the licensee, cancel the license or take such other action as it considers appropriate. Spectfic Recommendations for Modifying the Fourteenth Draft of the Electricity Law Recommendation Explanation Suggested Language for the Draft (5) Notwithstanding Clauses 2, 3, and 4, instead of revoking a license, the Electricity Regulatory Agency may allow the license to remain in force subject to such further terms and conditions as it may deem necessary to impose, and such terms and conditions shall form part of the license. In the event that the Electricity Regulatory Agency decides to cancel a license, it shall serve on the licensee a notice of cancellation fixing the date on which the cancellation shall take effect, and the Electricity Regulatory Agency shall make such interim arrangements in regard to the undertaking of the licensee for maintaining continuity in the provision of electricity service as the Electricity Regulatory Agency may consider appropriate. Review of the Draft Law 55 Endnotes I Energy Sector Management Assistance Program, a bilateral donor and World Bank-funded agency. 2 The Objective Oriented Project Planning methodology is described in detail in the Unido publication Quality Management of Development Cooperation, Part 2, "The Method" (Unido, Vienna 1997). Also, Part 1 ("Principles and Concepts") and Part 3 ("How to Assess the Quality of Service Proposals") are worth reading. 3 Each participant was given three votes, enabling them to cast a vote of three points for the most important problem, a vote of two points for the second most important problem, and a vote of one point for the third most important. These points were indicated on small post-it stickers that could be attached to the problem cards. The total points on each problem card were added up. One additional point was also added for each individual vote (that is, post-it sticker). This methodology, made it possible to identify the problems participants considered to be the most relevant. 4 The formal titles of the draft Decrees are: "On the Establishment and Approval of Electricity Tariff' (Tariff Decree); "On the Organization and Operation of Electricity Regulatory Directorate of Vietnam" (Regulatory Decree); and "On Issuance of License for Electricity Activities." I Joint UNDP/World Bank ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAM1E (ESMAP) LIST OF REPORTS ON COMPLETED ACTIITIES Region/Country Activity/Report Title Date Number SUB-SAHARAN AFRICA (AFR) Africa Regional Anglophone Africa Household Energy Workshop (English) 07/88 085/88 Regional Power Seminar on Reducing Electric Power System Losses in Africa (English) 08/88 087/88 Institutional Evaluation of EGL (English) 02/89 098/89 Biomass Mapping Regional Workshops (English) 05/89 -- Francophone Household Energy Workshop (French) 08/89 -- Interafrican Electrical Engineering College: Proposals for Short- and Long-Term Development (English) 03/90 112/90 Biomass Assessment and Mapping (English) 03/90 - Symposium on Power Sector Reform and Efficiency Improvement in Sub-Saharan Africa (English) 06/96 182/96 Commercialization of Marginal Gas Fields (English) 12/97 201/97 Commercilizing Natural Gas: Lessons from the Seminar in Nairobi for Sub-Saharan Africa and Beyond 01/00 225/00 Africa Gas Initiative - Main Report: Volume I 02/01 240/01 First World Bank Workshop on the Petroleum Products Sector in Sub-Saharan Africa 09/01 245/01 Ministerial Workshop on Women in Energy 10/01 250/01 Angola Energy Assessment (English and Portuguese) 05/89 4708-ANG Power Rehabilitation and Technical Assistance (English) 10/91 142/91 Africa Gas Initiative - Angola: Volume II 02/01 240/01 Benin Energy Assessment (English and French) 06/85 5222-BEN Botswana Energy Assessment (English) 09/84 4998-BT Pump Electrification Prefeasibility Study (English) 01/86 047/86 Review of Electricity Service Connection Policy (English) 07/87 071/87 Tuli Block Farms Electrification Study (English) 07/87 072/87 Household Energy Issues Study (English) 02/88 - Urban Household Energy Strategy Study (English) 05/91 132/91 Burkina Faso Energy Assessment (English and French) 01/86 5730-BUR Technical Assistance Program (English) 03/86 052/86 Urban Household Energy Strategy Study (English and French) 06/91 134/91 Burundi Energy Assessment (English) 06/82 3778-BU Petroleum Supply Management (English) 01/84 012/84 Status Report (English and French) 02/84 011/84 Presentation of Energy Projects for the Fourth Five-Year Plan (1983-1987) (English and French) 05/85 036/85 Improved Charcoal Cookstove Strategy (English and French) 09/85 042/85 Peat Utilization Project (English) 11/85 046/85 Energy Assessment (English and French) 01/92 9215-BU Cameroon Africa Gas Initiative - Cameroon: Volume III 02/01 240/01 Cape Verde Energy Assessment (English and Portuguese) 08/84 5073-CV Household Energy Strategy Study (English) 02/90 110/90 Central African Republic Energy Assessement (French) 08/92 9898-CAR Chad Elements of Strategy for Urban Household Energy The Case of N'djamena (French) 12/93 160/94 Region/Country Activity/lReport Title Date Number Comoros Energy Assessment (English and French) 01/88 7104-COM In Search of Better Ways to Develop Solar Markets: The Case of Comoros 05/00 230/00 Congo Energy Assessment (English) 01/88 6420-COB Power Development Plan (English and French) 03/90 106/90 Africa Gas Initiative - Congo: Volume IV 02/01 240/01 Cote d'Ivoire Energy Assessment (English and French) 04/85 5250-IVC Improved Biomass Utilization (English and French) 04/87 069/87 Power System Efficiency Study (English) 12/87 - Power Sector Efficiency Study (French) 02/92 140/91 Project of Energy Efficiency in Buildings (English) 09/95 175/95 Africa Gas Initiative - C6te d'Ivoire: Volume V 02/01 240/01 Ethiopia Energy Assessment (English) 07/84 4741-ET Power System Efficiency Study (English) 10/85 045/85 Agricultural Residue Briquetting Pilot Project (English) 12/86 062/86 Bagasse Study (English) 12/86 063/86 Cooking Efficiency Project (English) 12/87 -- Energy Assessment (English) 02/96 179/96 Gabon Energy Assessment (English) 07/88 6915-GA Africa Gas Initiative - Gabon: Volume VI 02/01 240/01 The Gambia Energy Assessment (English) 11/83 4743-GM Solar Water Heating Retrofit Project (English) 02/85 030/85 Solar Photovoltaic Applications (English) 03/85 032/85 Petroleum Supply Management Assistance (English) 04/85 035/85 Ghana Energy Assessment (English) 11/86 6234-GH Energy Rationalization in the Industrial Sector (English) 06/88 084/88 Sawmill Residues Utilization Study (English) 11/88 074/87 Industrial Energy Efficiency (English) 11/92 148/92 Guinea Energy Assessment (English) 11/86 6137-GUI Household Energy Strategy (English and French) 01/94 163/94 Guinea-Bissau Energy Assessment (English and Portuguese) 08/84 5083-GLUB Recommended Technical Assistance Projects (English & Portuguese) 04/85 033/85 Management Options for the Electric Power and Water Supply Subsectors (English) 02/90 100/90 Power and Water Institutional Restructuring (French) 04/91 118/91 Kenya Energy Assessment (English) 05/82 3800-KE Power System Efficiency Study (English) 03/84 014/84 Status Report (English) 05/84 016/84 Coal Conversion Action Plan (English) 02/87 - Solar Water Heating Study (English) 02/87 066/87 Peri-Urban Woodfuel Development (English) 10/87 076/87 Power Master Plan (English) 11/87 - Power Loss Reduction Study (English) 09/96 186/96 Implementation Manual: Financing Mechanisms for Solar Electric Equipment 07/00 231/00 Lesotho Energy Assessment (English) 01/84 4676-LSO Liberia Energy Assessment (English) 12/84 5279-LBR Recommended Technical Assistance Projects (English) 06/85 038/85 Power System Efficiency Study (English) 12/87 081/87 Madagascar Energy Assessment (English) 01/87 5700-MAG Power System Efficiency Study (English and French) 12/87 075/87 Region/Country Activity/Report Title Date Number Madagascar Environmental Impact of Woodfuels (French) 10/95 176/95 Malawi Energy Assessment (English) 08/82 3903-MAL Technical Assistance to Improve the Efficiency of Fuelwood Use in the Tobacco Industry (English) 11/83 009/83 Status Report (English) 01/84 013/84 Mali Energy Assessment (English and French) 11/91 8423-MLI Household Energy Strategy (English and French) 03/92 147/92 Islamic Republic of Mauritania Energy Assessment (English and French) 04/85 5224-MAU Household Energy Strategy Study (English and French) 07/90 123/90 Mauritius Energy Assessment (English) 12/81 3510-MAS Status Report (English) 10/83 008/83 Power System Efficiency Audit (English) 05/87 070/87 Bagasse Power Potential (English) 10/87 077/87 Energy Sector Review (English) 12/94 3643-MAS Mozambique Energy Assessment (English) 01/87 6128-MOZ Household Electricity Utilization Study (English) 03/90 113/90 Electricity Tariffs Study (English) 06/96 181/96 Sample Survey of Low Voltage Electricity Customers 06/97 195/97 Namibia Energy Assessment (English) 03/93 11320-NAM Niger Energy Assessment (French) 05/84 4642-NIR Status Report (English and French) 02/86 051/86 Improved Stoves Project (English and French) 12/87 080/87 Household Energy Conservation and Substitution (English and French) 01/88 082/88 Nigeria Energy Assessment (English) 08/83 4440-UNI Energy Assessment (English) 07/93 11672-UNI Rwanda Energy Assessment (English) 06/82 3779-RW Status Report (English and French) 05/84 017/84 Improved Charcoal Cookstove Strategy (English and French) 08/86 059/86 Improved Charcoal Production Techniques (English and French) 02/87 065/87 Energy Assessment (English and French) 07/91 8017-RW Commercialization of Improved Charcoal Stoves and Carbonization Techniques Mid-Term Progress Report (English and French) 12/91 141/91 SADC SADC Regional Power Interconnection Study, Vols. I-IV (English) 12/93 - SADCC SADCC Regional Sector: Regional Capacity-Building Program for Energy Surveys and Policy Analysis (English) 11/91 - Sao Tome and Principe Energy Assessment (English) 10/85 5803-STP Senegal Energy Assessment (English) 07/83 4182-SE Status Report (English and French) 10/84 025/84 Industrial Energy Conservation Study (English) 05/85 037/85 Preparatory Assistance for Donor Meeting (English and French) 04/86 056/86 Urban Household Energy Strategy (English) 02/89 096/89 Industrial Energy Conservation Program (English) 05/94 165/94 Seychelles Energy Assessment (English) 01/84 4693-SEY Electric Power System Efficiency Study (English) 08/84 021/84 Sierra Leone Energy Assessment (English) 10/87 6597-SL Somalia Energy Assessment (English) 12/85 5796-SO Republic of South Africa Options for the Structure and Regulation of Natural Gas Industry (English) 05/95 172/95 -4 - Region/Country Activity/Report Title Date Number Sudan Management Assistance to the Ministry of Energy and Mining 05/83 003/83 Energy Assessment (English) 07/83 4511 -SU Power System Efficiency Study (English) 06/84 018/84 Status Report (English) 11/84 026/84 Wood Energy/Forestry Feasibility (English) 07/87 073/87 Swaziland Energy Assessment (English) 02/87 6262-SW Household Energy Strategy Study 10/97 198/97 Tanzania Energy Assessment (English) 11/84 4969-TA Peri-Urban Woodfuels Feasibility Study (English) 08/88 086/88 Tobacco Curing Efficiency Study (English) 05/89 102/89 Remote Sensing and Mapping of Woodlands (English) 06/90 -- Industrial Energy Efficiency Technical Assistance (English) 08/90 122/90 Power Loss Reduction Volume 1: Transmission and Distribution SystemTechnical Loss Reduction and Network Development (English) 06/98 204A/98 Power Loss Reduction Volume 2: Reduction of Non-Technical Losses (English) 06/98 204B/98 Togo Energy Assessment (English) 06/85 5221-TO Wood Recovery in the Nangbeto Lake (English and French) 04/86 055/86 Power Efficiency Improvement (English and French) 12/87 078/87 Uganda Energy Assessment (English) 07/83 4453-UG Status Report (English) 08/84 020/84 Institutional Review of the Energy Sector (English) 01/85 029/85 Energy Efficiency in Tobacco Curing Industry (English) 02/86 049/86 FuelwoodlForestry Feasibility Study (English) 03/86 053/86 Power System Efficiency Study (English) 12/88 092/88 Energy Efficiency Improvement in the Brick and Tile Industry (English) 02/89 097/89 Tobacco Curing Pilot Project (English) 03/89 UNDP Terminal Report Energy Assessment (English) 12/96 193/96 Rural Electrification Strategy Study 09/99 221/99 Zaire Energy Assessment (English) 05/86 5837-ZR Zambia Energy Assessment (English) 01/83 4110-ZA Status Report (English) 08/85 039/85 Energy Sector Institutional Review (English) 11/86 060/86 Power Subsector Efficiency Study (English) 02/89 093/88 Energy Strategy Study (English) 02/89 094/88 Urban Household Energy Strategy Study (English) 08/90 121/90 Zimbabwe Energy Assessment (English) 06/82 3765-ZIM Power System Efficiency Study (English) 06/83 005/83 Status Report (English) 08/84 019/84 Power Sector Management Assistance Project (English) 04/85 034/85 Power Sector Management Institution Building (English) 09/89 -- Petroleum Management Assistance (English) 12/89 109/89 Charcoal Utilization Prefeasibility Study (English) 06/90 119/90 Integrated Energy Strategy Evaluation (English) 01/92 8768-ZIM Energy Efficiency Technical Assistance Project: Strategic Framework for a National Energy Efficiency Improvement Program (English) 04/94 -- Capacity Building for the National Energy Efficiency Improvement Programme (NEEIP) (English) 12/94 - 5 - Region/Country Activity/Report Title Date Number Zimbabwe Rural Electrification Study 03/00 228/00 EAST ASIA AND PACIFIC (EAP) Asia Regional Pacific Household and Rural Energy Seminar (English) 11/90 -- China County-Level Rural Energy Assessments (English) 05/89 101/89 Fuelwood Forestry Preinvestment Study (English) 12/89 105/89 Strategic Options for Power Sector Reform in China (English) 07/93 156/93 Energy Efficiency and Pollution Control in Township and Village Enterprises (TVE) Industry (English) 11/94 168/94 Energy for Rural Development in China: An Assessment Based on a Joint Chinese/ESMAP Study in Six Counties (English) 06/96 183/96 Improving the Technical Efficiency of Decentralized Power Companies 09/99 222/99 Fiji Energy Assessment (English) 06/83 4462-FIJ Indonesia Energy Assessment (English) 11/81 3543-IND Status Report (English) 09/84 022/84 Power Generation Efficiency Study (English) 02/86 050/86 Energy Efficiency in the Brick, Tile and Lime Industries (English) 04/87 067/87 Diesel Generating Plant Efficiency Study (English) 12/88 095/88 Urban Household Energy Strategy Study (English) 02/90 107/90 Biomass Gasifier Preinvestment Study Vols. I & II (English) 12/90 124/90 Prospects for Biomass Power Generation with Emphasis on Palm Oil, Sugar, Rubberwood and Plywood Residues (English) 11/94 167/94 Lao PDR Urban Electricity Demand Assessment Study (English) 03/93 154/93 Institutional Development for Off-Grid Electrification 06/99 215/99 Malaysia Sabah Power System Efficiency Study (English) 03/87 068/87 Gas Utilization Study (English) 09/91 9645-MA Mongolia Energy Efficiency in the Electricity and District Heating Sectors 10/01 247/01 Improved Space Heating Stoves for Ulaanbaatar 03/02 254/02 Myanmar Energy Assessment (English) 06/85 5416-BA Papua New Guinea Energy Assessment (English) 06/82 3882-PNG Status Report (English) 07/83 006/83 Institutional Review in the Energy Sector (English) 10/84 023/84 Power Tariff Study (English) 10/84 024/84 Philippines Commercial Potential for Power Production from Agricultural Residues (English) 12/93 157/93 Energy Conservation Study (English) 08/94 - Strengthening the Non-Conventional and Rural Energy Development Program in the Philippines: A Policy Framework and Action Plan 08/01 243/01 Rural Electrification and Development in the Philippines: Measuring the Social and Economic Benefits 05/02 255/02 Solomon Islands Energy Assessment (English) 06/83 4404-SOL Energy Assessment (English) 01/92 979-SOL South Pacific Petroleum Transport in the South Pacific (English) 05/86 - Thailand Energy Assessment (English) 09/85 5793-TH Rural Energy Issues and Options (English) 09/85 044/85 -6- Region/Country Activit/Report Title Date Number Thailand Accelerated Dissemination of Improved Stoves and Charcoal Kilns (English) 09/87 079/87 Northeast Region Village Forestry and Woodfuels Preinvestment Study (English) 02/88 083/88 Impact of Lower Oil Prices (English) 08/88 -- Coal Development and Utilization Study (English) 10/89 - Tonga Energy Assessment (English) 06/85 5498-TON Vanuatu Energy Assessment (English) 06/85 5577-VA Vietnam Rural and Household Energy-Issues and Options (English) 01/94 161/94 Power Sector Reform and Restructuring in Vietnam: Final Report to the Steering Committee (English and Vietnamese) 09/95 174/95 Household Energy Technical Assistance: Improved Coal Briquetting and Commercialized Dissemination of Higher Efficiency Biomass and Coal Stoves (English) 01/96 178/96 Petroleum Fiscal Issues and Policies for Fluctuating Oil Prices In Vietnam 02/01 236/01 An Overnight Success: Vietnam's Switch to Unleaded Gasoline 08/02 257/02 The Electricity Law for Vietnam-Status and Policy Issues- The Socialist Republic of Vietnam 08/02 259/02 Western Samoa Energy Assessment (English) 06/85 5497-WSO SOUTH ASIA (SAS) Bangladesh Energy Assessment (English) 10/82 3873-BD Priority Investment Program (English) 05/83 002/83 Status Report (English) 04/84 015/84 Power System Efficiency Study (English) 02/85 031/85 Small Scale Uses of Gas Prefeasibility Study (English) 12/88 -- Reducing Emissions from Baby-Taxis in Dhaka 01/02 253/02 India Opportunities for Commercialization of Nonconventional Energy Systems (English) 11/88 091/88 Maharashtra Bagasse Energy Efficiency Project (English) 07/90 120/90 Mini-Hydro Development on Irrigation Dams and Canal Drops Vols. I, II and III (English) 07/91 139/91 WindFarm Pre-Investment Study (English) 12/92 150/92 Power Sector Reform Seminar (English) 04/94 166/94 Environmental Issues in the Power Sector (English) 06/98 205/98 Environmental Issues in the Power Sector: Manual for Environmental Decision Making (English) 06/99 213/99 Household Energy Strategies for Urban India: The Case of Hyderabad 06/99 214/99 Greenhouse Gas Mitigation In the Power Sector: Case Studies From India 02/01 237/01 Energy Strategies for Rural India: Evidence from Six States 08/02 258/02 Nepal Energy Assessment (English) 08/83 4474-NEP Status Report (English) 01/85 028/84 Energy Efficiency & Fuel Substitution in Industries (English) 06/93 158/93 Pakistan Household Energy Assessment (English) 05/88 - Assessment of Photovoltaic Programs, Applications, and Markets (English) 10/89 103/89 - 7 - Region/Country Activity/Report Title Date Number Pakistan National Household Energy Survey and Strategy Formulation Study: Project Terminal Report (English) 03/94 -- Managing the Energy Transition (English) 10/94 Lighting Efficiency Improvement Program Phase 1: Commercial Buildings Five Year Plan (English) 10/94 Clean Fuels 10/01 246/01 Sri Lanka Energy Assessment (English) 05/82 3792-CE Power System Loss Reduction Study (English) 07/83 007/83 Status Report (English) 01/84 010/84 Industrial Energy Conservation Study (English) 03/86 054/86 EUROPE AND CENTRAL ASIA (ECA) Bulgaria Natural Gas Policies and Issues (English) 10/96 188/96 Central Asia and The Caucasus Cleaner Transport Fuels in Central Asia and the Caucasus 08/01 242/01 Central and Eastern Europe Power Sector Reform in Selected Countries 07/97 196/97 Increasing the Efficiency of Heating Systems in Central and Eastern Europe and the Former Soviet Union (English and Russian) 08/00 234/00 The Future of Natural Gas in Eastern Europe (English) 08/92 149/92 Kazakhstan Natural Gas Investment Study, Volumes 1, 2 & 3 12/97 199/97 Kazakhstan & Kyrgyzstan Opportunities for Renewable Energy Development 11/97 16855-KAZ Poland Energy Sector Restructuring Program Vols. I-V (English) 01/93 153/93 Natural Gas Upstream Policy (English and Polish) 08/98 206/98 Energy Sector Restructuring Program: Establishing the Energy Regulation Authority 10/98 208/98 Portugal Energy Assessment (English) 04/84 4824-PO Romania Natural Gas Development Strategy (English) 12/96 192/96 Slovenia Workshop on Private Participation in the Power Sector (English) 02/99 211/99 Turkey Energy Assessment (English) 03/83 3877-TU Energy and the Environment: Issues and Options Paper 04/00 229/00 MIDDLE EAST AND NORTH AFRICA (MNA) Arab Republic of Egypt Energy Assessment (English) 10/96 189/96 Energy Assessment (English and French) 03/84 4157-MOR Status Report (English and French) 01/86 048/86 Morocco Energy Sector Institutional Development Study (English and French) 07/95 173/95 Natural Gas Pricing Study (French) 10/98 209/98 Gas Development Plan Phase II (French) 02/99 210/99 Syria Energy Assessment (English) 05/86 5822-SYR Electric Power Efficiency Study (English) 09/88 089/88 Energy Efficiency Improvement in the Cement Sector (English) 04/89 099/89 Energy Efficiency Improvement in the Fertilizer Sector (English) 06/90 115/90 Tunisia Fuel Substitution (English and French) 03/90 -- I Power Efficiency Study (English and French) 02/92 136/91 - 8 - Region/Country ActivitY/Report Title Date Number Tunisia Energy Management Strategy in the Residential and Tertiary Sectors (English) 04/92 146/92 Renewable Energy Strategy Study, Volume I (French) 11/96 190A/96 Renewable Energy Strategy Study, Volume II (French) 11/96 190B/96 Yemen Energy Assessment (English) 12/84 4892-YAR Energy Investment Priorities (English) 02/87 6376-YAR Household Energy Strategy Study Phase I (English) 03/91 126/91 LATIN AMERICA AND THE CARIBBEAN (LAC) LAC Regional Regional Seminar on Electric Power System Loss Reduction in the Caribbean (English) 07/89 - Elimination of Lead in Gasoline in Latin America and the Caribbean (English and Spanish) 04/97 194/97 Elimination of Lead in Gasoline in Latin America and the Caribbean - Status Report (English and Spanish) 12/97 200/97 Harmonization of Fuels Specifications in Latin America and the Caribbean (English and Spanish) 06/98 203/98 Bolivia Energy Assessment (English) 04/83 4213-BO National Energy Plan (English) 12/87 - La Paz Private Power Technical Assistance (English) 11/90 111/90 Prefeasibility Evaluation Rural Electrification and Demand Assessment (English and Spanish) 04/91 129/91 National Energy Plan (Spanish) 08/91 131/91 Private Power Generation and Transmission (English) 01/92 137/91 Natural Gas Distribution: Economics and Regulation (English) 03/92 125/92 Natural Gas Sector Policies and Issues (English and Spanish) 12/93 164/93 Household Rural Energy Strategy (English and Spanish) 01/94 162/94 Preparation of Capitalization of the Hydrocarbon Sector 12/96 191/96 Introducing Competition into the Electricity Supply Industry in Developing Countries: Lessons from Bolivia 08/00 233/00 Final Report on Operational Activities Rural Energy and Energy Efficiency 08/00 235/00 Oil Industry Training for Indigenous People: The Bolivian Experience (English and Spanish) 09/01 244/01 Brazil Energy Efficiency & Conservation: Strategic Partnership for Energy Efficiency in Brazil (English) 01/95 170/95 Hydro and Thermal Power Sector Study 09/97 197/97 Rural Electrification with Renewable Energy Systems in the Northeast: A Preinvestment Study 07/00 232/00 Chile Energy Sector Review (English) 08/88 7129-CH Colombia Energy Strategy Paper (English) 12/86 -- Power Sector Restructuring (English) 11/94 169/94 Energy Efficiency Report for the Commercial and Public Sector (English) 06/96 184/96 Costa Rica Energy Assessment (English and Spanish) 01/84 4655-CR Recommended Technical Assistance Projects (English) 11/84 027/84 Forest Residues Utilization Study (English and Spanish) 02/90 108/90 Dominican Republic Energy Assessment (English) 05/91 8234-DO Ecuador Energy Assessment (Spanish) 12/85 5865-EC -9- Region/Country .Activity/Report Title Date Number Ecuador Energy Strategy Phase I (Spanish) 07/88 Energy Strategy (English) 04/91 -- Private Minihydropower Development Study (English) 11/92 -- Energy Pricing Subsidies and Interfuel Substitution (English) 08/94 11798-EC Energy Pricing, Poverty and Social Mitigation (English) 08/94 12831-EC Guatemala Issues and Options in the Energy Sector (English) 09/93 12160-GU Haiti Energy Assessment (English and French) 06/82 3672-HA Status Report (English and French) 08/85 041/85 Household Energy Strategy (English and French) 12/91 143/91 Honduras Energy Assessment (English) 08/87 6476-HO Petroleum Supply Management (English) 03/91 128/91 Jamaica Energy Assessment (English) 04/85 5466-JM Petroleum Procurement, Refining, and Distribution Study (English) 11/86 061/86 Energy Efficiency Building Code Phase I (English) 03/88 - Energy Efficiency Standards and Labels Phase I (English) 03/88 - Management Information System Phase I (English) 03/88 - Charcoal Production Project (English) 09/88 090/88 FIDCO Sawmill Residues Utilization Study (English) 09/88 088/88 Energy Sector Strategy and Investment Planning Study (English) 07/92 135/92 Mexico Improved Charcoal Production Within Forest Management for the State of Veracruz (English and Spanish) 08/91 138/91 Energy Efficiency Management Technical Assistance to the Comision Nacional para el Ahorro de Energia (CONAE) (English) 04/96 180/96 Energy Environment Review 05/01 241/01 Nicaragua Modernizing the Fuelwood Sector in Managua and Le6n 12/01 252/01 Panama Power System Efficiency Study (English) 06/83 004/83 Paraguay Energy Assessment (English) 10/84 5145-PA Recommended Technical Assistance Projects (English) 09/85 -- Status Report (English and Spanish) 09/85 043/85 Peru Energy Assessment (English) 01/84 4677-PE Status Report (English) 08/85 040/85 Proposal for a Stove Dissemination Program in the Sierra (English and Spanish) 02/87 064/87 Energy Strategy (English and Spanish) 12/90 -- Study of Energy Taxation and Liberalization of the Hydrocarbons Sector (English and Spanish) 120/93 159/93 Reform and Privatization in the Hydrocarbon Sector (English and Spanish) 07/99 216/99 Rural Electrification 02/01 238/01 Saint Lucia Energy Assessment (English) 09/84 5111 -SLU St. Vincent and the Grenadines Energy Assessment (English) 09/84 5103-STV Sub Andean Environmental and Social Regulation of Oil and Gas Operations in Sensitive Areas of the Sub-Andean Basin (English and Spanish) 07/99 217/99 Trinidad and Tobago Energy Assessment (English) 12/85 5930-TR - 10 - Region/Country Activity/Report Title Date Number GLOBAL Energy End Use Efficiency: Research and Strategy (English) 11/89 - Women and Energy-A Resource Guide The International Network: Policies and Experience (English) 04/90 - Global Guidelines for Utility Customer Management and Metering (English and Spanish) 07/91 Assessment of Personal Computer Models for Energy Planning in Developing Countries (English) 10/91 -- Long-Term Gas Contracts Principles and Applications (English) 02/93 152/93 Comparative Behavior of Firms Under Public and Private Ownership (English) 05/93 155/93 Development of Regional Electric Power Networks (English) 10/94 - Roundtable on Energy Efficiency (English) 02/95 171/95 Assessing Pollution Abatement Policies with a Case Study of Ankara (English) 11/95 177/95 A Synopsis of the Third Annual Roundtable on Independent Power Projects: Rhetoric and Reality (English) 08/96 187/96 Rural Energy and Development Roundtable (English) 05/98 202/98 A Synopsis of the Second Roundtable on Energy Efficiency: Institutional and Financial Delivery Mechanisms (English) 09/98 207/98 The Effect of a Shadow Price on Carbon Emission in the Energy Portfolio of the World Bank: A Carbon Backcasting Exercise (English) 02/99 212/99 Increasing the Efficiency of Gas Distribution Phase 1: Case Studies and Thematic Data Sheets 07/99 218/99 Global Energy Sector Reform in Developing Countries: A Scorecard 07/99 219/99 Global Lighting Services for the Poor Phase II: Text Marketing of Small "Solar" Batteries for Rural Electrification Purposes 08/99 220/99 A Review of the Renewable Energy Activities of the UNDP/ World Bank Energy Sector Management Assistance Programme 1993 to 1998 11/99 223/99 Energy, Transportation and Environment: Policy Options for Environmental Improvement 12/99 224/99 Privatization, Competition and Regulation in the British Electricity Industry, With Implications for Developing Countries 02/00 226/00 Reducing the Cost of Grid Extension for Rural Electrification 02/00 227/00 Undeveloped Oil and Gas Fields in the Industrializing World 02/01 239/01 Best Practice Manual: Promoting Decentralized Electrification Investment 10/01 248/01 Peri-Urban Electricity Consumers-A Forgotten but Important Group: What Can We Do to Electrify Them? 10/01 249/01 Village Power 2000: Empowering People and Transforming Markets 10/01 251/01 Private Financing for Community Infrastructure 05/02 256/02 08/23/02 The World Bank 1818 H Street, NW Washington, DC 20433 USA Tel 1 202 458 2321 Fax 1 202 522 3018 Internet www esmap org Email esmap@worldbank org ^~~~~~~~~~ _ -~\ . 1<1 = JontUDPWrL Bn P aJ A joint UNDP/Wortd Bank Progra,m\mI