Electricity price negotiations to precede power plant construction?

Power projects will only be allowed to kick off after the projects’ investors and the Electricity of Vietnam (EVN), the only buyer, have negotiated projects’ electricity sale prices, if EVN has its way.

This is the latest proposal which EVN has made to the government related to the investment mechanism for non-EVN power projects.

According to Ta Van Huong, Director of the Energy Department under the Ministry of Industry and Trade, investors and EVN still have not reached agreement on electricity sale prices, even though the projects are about to be put into commercial operation.

In general, electricity sale prices required by investors are always higher than the price at which EVN wants to purchase. This explains why many negotiations on electricity prices last several years.

Before investors kick off the construction of power plants, investors and EVN just sign a principle agreement on EVN’s purchase of electricity of the projects.

This way has caused many difficulties for both sides. Investors cannot anticipate all the input expenses that may arise during the plant’s construction. Meanwhile, EVN, though being the only buyer, cannot easily accept offers by investors due to the set retail price limit.

The problems have mostly occurred with the projects of two domestic investors, the Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam Coal and Mineral Industries Group (Vinacomin). These include Ca Mau Power Plant, Nhon Trach 1 invested by PetroVietnam, Cam Pha 1 and 2 thermopower plant, Nong Son thermopower Plant, Son Dong thermopower plant by Vinacomin.

The price negotiation which stirred up the public recently was the negotiation on the electricity price of Son Dong thermopower plant, which lasted from November 2007 to May 2008. In 2007, Vinacomin at first required the price of 720 dong per kwh, and then lowered it to 710 dong. However, EVN said it could only accept the price of 678.4 dong. Finally, the electricity purchase contract was signed between Vinacomin and EVN with the 678.4 per kwh as proposed by EVN.

Huong said that if the suggested scheme is approved by the prime minister, it will help settle the problem at the roots.

Pham Huyen

vietnamnet

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