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Power-price wrangle blamed on poor investment planning
Poor investment planning for the Son Dong electricity plant has led to major headaches for Government officials as State firms wrangle over electricity prices from the plant in the northern province of Bac Giang.
The head of Energy under the Ministry of Industry and Trade, Ta Van Huong, said pricing disputes such as the current disagreement between Electricity of Viet Nam (EVN), the Viet Nam National Oil and Gas Group (PetroVietnam or PVN) and Viet Nam National Coal-Mineral Industries Group (VINACOMIN), were a result of inadequate planning.
Huong said these disputes between State groups had occurred because those in charge of the two power plant projects hadn’t finalised contracts on electricity supply before the plants began operations.
"Any power plant that starts operating but still hasn’t officially signed contracts with buyers is wrong - it violates the basic principle of investment," said Huong.
Huong said State enterprises were being reckless with their investment plans, as they thought that Government would always help out if there were any problems down the line.
This was in stark contrast to the ways private enterprises operate. Private firms are careful to implement all procedures, including sales contracts, before the project begins operations. In the case of foreign-invested power plants, sales contracts were usually signed before the plants begin producing power.
Another disagreement over power pricing had occured at the Ca Mau Electricity Power Plant in the southern-most province of Ca Mau.
The Son Dong electric plant in the northern province of Bac Giang had a capacity of 220MW. Prime Minister Nguyen Tan Dung allowed VINACOMIN to invest in the project in 2004, the year before construction work was completed. By the end of 2008, the plant was hooked up to the national power grid, and its electricity would be officially sold from the second quarter of this year.
However, VINACOMIN did not complete a contract to sell electricity to EVN, although the plant was scheduled to officially begin supplying electricity next month and the power shortages of the dry season were also approaching fast.
According to a statement from VINACOMIN, on January 15, 2009, it proposed that the plant sell electricity at VND710 (US$0.42) per kWh. EVN said the price was too high, proposing a rate of VND678 per kWh.
After more than one year of negotiations, VINACOMIN and EVN could only agree on one thing, that the Son Dong electric plant’s electricity price would consist of two components: a fixed cost and shifting costs that could be modified in line with coal price fluctuations. Coal was supplied by VINACOMIN.
The head of VINACOMIN’s Planning Department, Nguyen Van Bien, said that in negotiations over electricity prices, EVN was the only buyer, while there were many sellers, including VINACOMIN. In addition, the State still had not developed a mechanism for electricity sales and there was no arbitrator for pricing disputes. Therefore price negotiations often lasted for a long time and often ended with no results.
VietNamNet/Viet Nam News
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