Calling on the government to enforce stricter controls on outdated, power-consuming steel production technology, Electricity of Vietnam said large steel producers should be required to build their own power plants.

Foreign steel producers invest in Vietnam to take advantage of the country's government-regulated low electricity prices, only to export their products, EVN says.

Steel plants in the country buy electricity at about $4.78 per kilowatt hour, compared to $8.12 in Thailand and $14.10 in Singapore.

A rise in the number of steel mills, fueled by the low prices, has put a further strain on the country's power system, EVN says.

A recent report from Vietnam's Ministry of Industry and Trade shows that up to 65 steel mills have operated or been built in the country since 2007. That's far more than the 23 projects estimated in a development plan for the industry that the government approved 3 years ago.

Vietnam Steel Association Chairman Pham Chi Cuong said factors of environment, natural conditions and production capacity were "carefully considered" when mapping out the steel industry development plan, Thanh Nien News reports.

"However, some localities are not following the plan, resulting in wasteful use of resources and environmental pollution," Cuong said.

While the country's per capita consumption of electricity is 867 kilowatt hours per year, it takes 700 kilowatt hours of electricity to produce 1 ton of steel billet, which is the freshly made steel, still in the form of a metal bar or rectangle. It takes another 120 kilowatt hours to make 1 ton of steel products from the billets, Cuong said.

With demand for electricity growing at 15 per cent a year, Vietnam's Prime Minister Nguyen Tan Dung urged that construction of new power projects move ahead quickly. But an EVN official pointed out that a new power plant takes 3 to 4 years to build, Thanh Nien News reports.

While foreign steel companies are attracted by Vietnam's low electricity costs, EVN's monopoly over power distribution discourages foreign investment in new power plants, analysts say.

A wave of power outages and blackouts this summer has generated political pressure to break up the state-owned utility.

"The shortage of electricity will last forever unless EVN is reformed," said Hoang Van Dung, deputy chairman of the Vietnam Chamber of Commerce and Industry, the Financial Times reported in June.

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