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Speech by Akiko Fujii, Deputy Country Director at the workshop on ensuring social equity in market-oriented reforms of the power sector in Viet Nam

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Date: 10th January, 2017
Event: Workshop: Ensuring social equity in market-oriented reforms of the power sector in Viet Nam
Venue: Room 3D, VASS building, 1 Lieu Giai, Ha Noi

Associate Professor Dr Đặng Nguyên Anh, Vice President of the Viet Nam Academy of Social Sciences;
Mr Graham Knight, Head of Internal Political Section, United Kingdom Embassy in Ha Hoi;
Representatives of ministries and government agencies;
Researchers and development partners;
Ladies and Gentlemen, Good Morning.
In 2010 UNDP and a number of national partners, embarked on a programme of research to support the Government in reforming fossil fuel fiscal policies in Viet Nam, specifically addressing reductions in subsidies and changes in energy tariffs.  Today’s session presents the fourth and final research of the series. We will hear shortly today about the implications for SMEs, and for poor and vulnerable consumers, and how well transitional measures have succeeded.
The work has been important for Viet Nam to examined how Viet Nam might pursue a set of reforms which were simultaneously environmentally sustainable and socially equitable.  Viet Nam’s commitment is particularly important in the context of global development frameworks that Viet Nam is also committed to.

First framework is the Agenda 2030 for Sustainable Development, SDGs, adopted by world leaders in Sep 2015. The issue we discuss today is at the core of Viet Nam’s efforts in achieving SDGs: particularly SDG 1, poverty eradication, and SDG 7, which calls us to secure access to affordable, reliable, sustainable and modern energy for all by 2030.

Seondly, at the 2015 Paris Climate Conference (COP21), 195 nations negotiated an historic climate agreement—one that declared that not only do we need to hold the increase in the global average temperature to “well below 2°C above pre-industrial levels” but we also need to pursue efforts to limit the increase to 1.5°C.

UNDP is committed to supporting the government in its ambitous endeavour in achieving those goals.

Looking back in the history of the study series, the Phase 1 established the core economic and environmental case for fossil fuel fiscal reforms. Its research findings contributed to ensuring the Government’s commitment to phasing out fossil fuel subsidies, as subsequently given in the Green Growth Strategy and the Green Growth Action Plan.  Phase 2 looked at the political economy of reform, and phase 3 provided recommendations on fiscal policies to enable renewable power generation and offer a road map for reform, which could easily be taken up by Government and EVN.

While this final fourth phase includes a review of both the impacts on SMEs and the vulnerable, today’s session focuses on the latter.  This is based on an explicit recognition, based on the findings from phases 1 and 2, that the near term effects for those on low incomes could be considerable.  Encouragingly, Government took these earlier findings on board – and maintained a simplified block tariff and rolled-out a cash transfer for the poor.

You will hear today the authors’ radical new thinking soon – offering a couple of options.  I emphasize these measures do not re-impose a social responsibility on EVN, but rather they re-shape the tariff to maximize welfare and redistribute between users.  They offer the basis of a socioeconomically and environmentally sustainable charging system – both protecting the poor and incentivizing energy efficiency.  

I conclude by underling that this remains an important policy area. It is right time for the current mitigation measures to be assessed and reappraised.  It brings together several policy themes – including economic growth, poverty reduction and social protection and environmental sustainability.

I acknowledge the strong contribution of the two VASS research teams, and CIEM colleagues. I thank the UK Foreign and Commonwealth Office and the UK Embassy in Ha Noi for their financial support and continued interest in these important topic areas. I do hope it is something we can take forward.

I wish all participants well with the discussions. I reiterate UNDP’s commitment to supporting Government to deliver environmentally sound and socially equitable reforms in the power sector.  Xin cam on!