MOIT VIETNAM | The Partnership between Vietnam and Laos in the Energy Sector has Produced Encouraging Results.

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The Partnership between Vietnam and Laos in the Energy Sector has Produced Encouraging Results.

8th January 2024 post by MOIT Vietnam

Vietnam and Laos have been pursuing strategies to strengthen energy sector cooperation at the same time for many years. As a result, the relationship between the two nations' Parties, States, and People has become stronger, building on their long-standing historic unity. This has really occurred, and that is clear.

Ủy ban liên Chính phủ về hợp tác song phương Việt Nam-Lào

The electrical business has tremendous untapped potential for growth.

A Memorandum of Understanding signed in 2016 between the Vietnamese and Laotian governments includes hydropower project development, power network connection, and energy imports from Laos. This occurred due to the significance of cooperation between the two countries. In 2019, a Cooperation Agreement for the Development of Energy, Mining, and Power Projects was inked.

There has been a focus on strengthening collaboration between Vietnam and Laos, with a special emphasis on the power dynamic. The two parties have expanded their cooperation agreements to facilitate the implementation of a wide range of investment projects and energy cooperation initiatives. Among them are the following: a Vietnam-Laos Memorandum of Understanding on the development of interconnected hydropower projects, connection to the power grid, and electricity imports from Laos; an agreement to promote cooperation in the purchase and sale of electricity; and an agreement to support the development of hydroelectric projects in Laos. These efforts have not only contributed to enhancing the unique relationship between the two countries' political parties, governments, and people, but they have also achieved some positive outcomes that have benefitted both countries in practical ways. The Vietnamese and Laotian ministries of industry and commerce worked together to make these initiatives a success.

On October 5, 2016, Vietnam and Laos signed a Memorandum of Understanding that states that by 2025, the aggregate capacity of energy imports from Laos to Vietnam would be 3,000 MW, increasing to 5,000 MW by 2030. Its capacity is expected to grow to 5,000 MW by 2030.

According to a report from the 46th session of the Intergovernmental Committee on bilateral cooperation between Vietnam and Laos, energy cooperation is still being aggressively pursued. Prime Minister Pham Minh Chinh and Lao Prime Minister Sonexay Siphandone co-chaired the session, which took place on January 7, 2024. According to the report, Vietnam has very effectively met its target of importing electricity from Laos between 2021 and 2025. At the same time, several substantial initiatives saw long-standing difficulties and hurdles handled in an efficient and comprehensive manner. Vietnam Electricity Group (EVN) has signed 19 contracts to acquire electricity from 26 hydroelectric projects in Laos, totaling 2,689 megawatts.

Electric Vietnam (EVN) does more than only purchase electricity from Laotian power plants; it also invests in the development of power grid infrastructure capable of handling medium and low voltage demands. These grid systems may be used to sell and transport electricity to border villages along the Vietnam-Laos border, assisting these towns in improving their economic and social standing. EVN can offer energy around the clock in a reliable and secure manner, ensuring high-quality electricity.

Việt Nam, Lào thúc đẩy hợp tác trong lĩnh vực năng lượng

Promoting collaboration among coal transportation personnel is critical.

The 45th Meeting of the Vietnam-Laos Bilateral Cooperation Committee was recently completed, and the Vietnamese Ministry of Industry and Trade and the Laotian Ministry of Energy and Mines finished their cooperative work on a coal-related Memorandum of Understanding. This was again another triumph for both missions. Executed in line with directions given by the two nations' prime ministers, the goal is to improve cooperation in the energy sector, namely in the coal trade. The signing of a memorandum of understanding promised to establish the basis for a legislative framework that would promote and enable increased cooperation within the coal sector. The intention behind the signing of the memorandum of understanding was to establish the foundation for mutually beneficial bilateral cooperation in the coal industry.

A Memorandum of Understanding was signed on July 20, 2023, between the Vietnamese Ministry of Industry and Trade and the Laotian Ministry of Energy and Mines. The agreement was loaded with sections aimed at improving bilateral cooperation in the coal trade. The two countries' discussions that resulted in this agreement aimed to increase economic cooperation. Below are some of the provisions: First, investment cooperation in coal mining, processing, and export activities should be encouraged; second, coal mining and processing capacity building experiences should be improved; and third, Laos and Vietnam should aim to export 20 million tons of coal to Vietnam each year, subject to each party's actual market conditions and requirements. The contract includes all of these terms. Each of these criteria is included in the agreement. Furthermore, the deal would improve coal trade between the two nations' enterprises, which is a significant benefit. A four-year memorandum of understanding has been agreed upon.

The value of this work stems mostly from its real-world implications for both nations. The Vietnamese Ministry of Industry and Trade and the Laotian Ministry of Energy and Mines have signed a Memorandum of Understanding, formally committing to following the directives of their senior leaders, strengthening the cooperation framework between their countries, strengthening the friendship and solidarity between their people and parties, and ensuring both countries' energy security. Another objective of this agreement is to promote Vietnam's energy transition in accordance with its international responsibilities while also allowing Laos to utilize its natural resource potential for economic and national security purposes. This is the aim of the agreement.

The Vietnamese and Laotian ministries of industry and trade will then work to formalize the terms of the high-level agreement that their respective governments signed. This is what the next step will look like. This will be accomplished by developing an energy cooperation deal and proposing it to the Conference on December 9, 2023, with the goal of promoting coal trade cooperation between the two nations. Importing coal and energy from Laos is an effective approach for Vietnam to grow its economy and achieve national security. As a result, Vietnam may achieve both objectives simultaneously, which is beneficial to both nations' economies.

Việt Nam-Lào thúc đẩy hợp tác về lĩnh vực năng lượng, mỏ và khoáng sản |  Vietnam+ (VietnamPlus)

Minister Nguyen Hong Dien, who was present at the conference, tasked the Electricity Vietnam (EVN) Corporation with advocating the building of a new transmission line between Vietnam and Laos. The purpose of this measure was to enable Vietnam to import energy from Laos to a larger degree. Meanwhile, you must finish the process of designing a pricing structure for Laos' imported power and submit it to the government by the beginning of the first quarter of 2024.

In addition, the Minister of Industry and Trade has assigned the following tasks to the Vietnam Coal and Mineral Industry Group (TKV) and Dong Bac Corporation in accordance with the high-level agreement: propose an import mechanism (buying and selling price) for coal from Laos to Vietnam; increase Vietnam's capacity to receive coal; sign a principle contract with Lao partners focused on output; and immediately put their plans into action upon agreement.

During his April 2022 business trip to Laos, Vietnamese Minister Nguyen Hong Dien expressed optimism that Vietnam and Laos may collaborate on electricity sector projects. He said something like this when discussing the electricity industry. The minister attended the meeting so that he and the Lao Ministry of Industry and Trade could co-chair the Border Trade Development Cooperation Panel. Because he was present at the conference, this may have occurred. Vietnamese authorities are attempting to shift the country's energy supply away from fossil fuels and toward renewable energy sources in order to accomplish the country's goal of achieving net zero emissions by 2050. The reasons for these measures include addressing the needs of the country's vast population, a strong economy, and high power consumption.