Saturday, 23 September, 2023

Power crisis cost Vietnam $1.4 bn: World Bank

A severe power shortage in Vietnam caused by an intensely hot spell and unprecedented drought in May and June cost the country $1.4 billion, according to the World Bank.

Northern Vietnam suffered rolling blackouts and sudden power outages, with operations at a large number of factories badly impacted. Some businesses were given very little notice or had no warning at all.

Vietnam is a crucial part of the supply chain for some of the world's most important companies, and many of them -- including Samsung and Apple supplier Foxconn -- have factories in the north, not far from Hanoi.

The World Bank said with an estimated peak demand supply deficit of 1.8GW, businesses in the north reported losses of up to 10 percent of revenue, citing a small industry survey as part of its August economic updates.

"The preliminary estimate of economic costs for the May-June power outages is about US$1.4 billion (or 0.3 percent of GDP)," the World Bank said in its Taking Stock report released Thursday.

Vietnam struggled with a series of heatwaves beginning early May when the mercury reached a record high, while rivers and reservoirs at hydroelectric power plants dried up.

The country relies on hydropower for almost half its energy needs, while demand for electricity in the southeast Asian nation is increasing by more than eight percent per year on average.

The government is targeting a two percent reduction in energy consumption per year until 2025, suggesting the power issue may persist.

"Prompt action is needed to mitigate future risks to energy security and economic losses," the bank urged authorities in the report.

Scientists warn weather extremes have intensified because of global warming.

The situation this year improved in early July following heavy rain.