Viet Nam’s long-term power sector reform must gradually shift it towards market-based pricing with a view to improving economic efficiency. Major milestones in the sector’s reform were the approval of the Electricity Law in 2004, and the introduction of a reform road map including developing a competitive wholesale electricity market in 2006. The competitive generation market was basically established in July 2012, and according to a revised roadmap, a fully competitive retail market will be achieved by 2030.

Viet Nam also issued the Renewable Energy Development Strategy in 2015  and committed to reduction of greenhouse gas emissions under the Paris Agreement of the UN Framework Convention on Climate Change. These policies align with its commitment to phase out fossil fuel subsidies in the national Green Growth Strategy. Substantial reductions in electricity subsidies have been observed for the period until 2014  and this is expected to be maintained especially because the Government will not accept further rises in public sector debt. State-owned Enterprises also carry debt and Electricity Viet Nam (EVN) reported very substantial losses in the first half of 2016. The last increase in power tariffs took place in May 2015 but because of these policies and developments taken together, an increase in power tariffs in 2017 and later seems inevitable.