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Want to invest in power? Talk to EVN!
The biggest foreign investor in Vietnam, Formosa, has asked the government for permission to build a 800 MW power plant in Ha Tinh province. Experts have predicted a wave of investments in power projects as a lot of other investors also plan to build power plants. However, they also have warned that the biggest hindrance is the monopoly of EVN.
Formosa wants to build the power plant as it thinks that it needs to take initiative in supplying electricity to its steel complex in Vung Ang economic zone, Son Duong deep water port and a petrochemical project.
Sources say that the government will give the green light.
New trend
Experts say that there is a growing trend of big industrial groups building power generating plants to provide electricity for their own systems.
Earlier this year, Tan Tao Group (Itaco) signed a contract on the implementation of the Kien Luong thermopower plant in Kien Giang province. The 4,400MW power plant, which is expected to become operational in 2013, will sell electricity to enterprises in the Itaco-owned industrial zone, the biggest real estate developer in Vietnam.
Formosa and Itaco are two among many international and domestic corporations which plan to build independent plants in order to deal with the current serious electricity shortage.
According to the Ministry of Industry and Trade, tens of big investors from Europe and America have applied for investments in power projects. However, the negotiations with EVN about electricity sale prices have not been smooth. As a result, there are very few foreign investors in the power sector, and the power supply remains tense.
The obstacle named EVN
One decade ago, the US-based Oxbow asked for permission to build a 650MW thermopower plant in Quang Ninh province. The then Prime Minister Phan Van Khai and Deputy Prime Minister Nguyen Manh Cam strongly supported the project. However, EVN insisted that it would purchase electricity for no more than UScent4/kwh, a very low level.
At that time, the Vietnam Coal Corporation said that it would only sell coal to the US investor at VND400,000/tonne, while the retail price of the kind of coal was just VND280,000/tonne. Finally, the US investor decided to give up the game, though it has spent a lot of energy on the project.
Meanwhile, EVN has said many times that it is necessary to raise electricity prices in order to have enough money for power project investments.
However, Prof Dr Nguyen Mai, a senior economist, affirmed that EVN is making profit with the current electricity prices. 50% of electricity output comes from hydropower plants, while a lot of EVN’s plants have been operational for 20 years, which allow it to provide electricity at lower prices.
40% of electricity output comes from old power plants, and 60% from new plants, which have the production cost of UScent4.5/kwh. Therefore, the average electricity price must not be higher than UScent4/kwh.
Mai said that Vietnam will still lack electricity and Vietnamese people will still have to use expensive electricity while the monopoly exists.
VNN
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