Recent changes in regulations appear to have sparked off interest in Vietnam’s fledgling hydroelectricity market, said the Ministry of Industry. Over the last two years, it reported that domestic investors have signed up to support 70 small hydroelectric projects in the country.

The ministry said its December 2002 decision to liberalise the management, investment and construction of independent power projects encouraged the rise in investor interest in small power plants in power-short Vietnam.

It attributed the growth of the sector to three reasons, starting with the fact that Vietnam is short of power supply given the needs of a fast-growing economy.

The ministry’s power department said the country needs an additional 1,000MW of electricity annually, but there are not enough large projects being built to meet that demand.

Secondly, Vietnam has plenty of rivers and streams, giving the potential to build small- and medium-sized plants at a reasonable cost for domestic enterprises. Permits for site clearance for hydro-power projects are being issued with greater ease than for projects in industrial zones.

Most importantly, hydropower plants yield quick returns in Vietnam. According to local players, a small plant costing less than US$1 million can yield a return on capital after eight years.