VIETNAM Law and Practice Contributed by: Adam Moncrieff and Thuy Huynh, Orrick
planning conversation. Whether all of that capacity will be delivered on schedule is uncertain, but the direc- tion of travel is clear. 2.4 Market Concentration Limits Vietnam does not impose an electricity-sector market share cap of the kind seen in some other unbundled markets. There is no single rule that says one genera- tor or group cannot control more than a stated per- centage of supply nationwide. The more important legal framework is the general competition regime, which applies across sectors and can capture anti- competitive agreements, abuse of dominance and notifiable economic concentrations. In the power sector, however, concentration is influenced as much by policy design as by competition law. The ability of the private sector to engage in these kinds of anti- competitive behaviour in Vietnam is severely limited, because electricity sale and purchase agreements are invariably based on EVN’s own forms for large-scale generators. Direct selling of electricity is also limited. Even premises consuming rooftop solar or inside-the- fence generated electricity can always buy from the grid and EVN. If anything, the economic concentra- tion lies with the state-owned electricity generators including EVN itself and the fact that it is the sole grid operator. That is to say, it is EVN’s continuing role in transmis- sion, distribution, retail supply and the single-buyer model which already creates a concentrated struc- ture by design. Vietnam’s power sector regulations therefore require competition through the VWEM, the dispatch market and the administered system but do not allow or effectively provide for competition in transmission or offtake. There is effectively no buyer- choice at the retail level. For investors, the practical takeaway is straightfor- ward. Market concentration is not usually the first obstacle to investment in the electricity generation sector in Vietnam, unless the transaction is especially large or strategically sensitive. The more immediate issues are planning status, licensing, change-of-con- trol consent, project completion risk and whether the acquired asset has a durable revenue profile. Com- petition review still matters, but it rarely displaces the sector-specific investment issues. The real competi-
tion issues are those mentioned in the previous para- graph. 2.5 Surveillance to Detect Anti-Competitive Behaviour Vietnam’s competition authorities have jurisdiction over anti-competitive conduct in the power sector, and the National Competition Commission is the key institution under the general competition regime. In theory, that covers collusive arrangements, abuse of market power and anti-competitive concentrations. In practice, however, many of the most sensitive issues in electricity are not classic cartel or manipulation cas- es. They are questions of regulated access, dispatch priority, tariff design and institutional power within a partly monopolistic system. Sector regulators also play an important role. The MOIT, the Electricity Authority of Vietnam and the NSMO all influence how the market operates, how participants are monitored and how compliance issues are addressed. Their involvement is especially important because technical rule breaches, dispatch disputes and licensing non-compliance may matter more in this market than textbook competition cases. In other words, surveillance is split between general competition law and sector-specific oversight. The available enforcement tools are broad enough on paper. Authorities can investigate conduct, require information, review concentrations, impose admin- istrative sanctions and, in serious cases, require remedial action. For electricity businesses, the real exposure often comes from a combination of com- petition risk and regulatory risk. A participant may be less worried about a cartel investigation than about losing its licence, breaching market rules, damaging its relationship with the system authorities or not being paid under its PPA. 3. Generation Facilities 3.1 Constructing and Operating Generation Facilities The legal framework for generation projects is now more coherent than it was a few years ago, but it is still spread across multiple statutes and implementing
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