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Steel mills have to build power plants for themselves?
The Electricity of Vietnam (EVN) thinks that the new steel projects which have the power consumption of more than 100MW have to build power plants for themselves. The idea has been described by the Vietnam Steel Association (VSA) as an unreasonable requirement.
VSA’s Chairman Nguyen Tien Nghi, when talking with Tien phong’s reporters, said that no other country in the world has such a behaviour to the steel industry.
In a report submitted to the Prime Minister recently, EVN said that the low electricity price in Vietnam has prompted foreign investors to set up steel projects in Vietnam. The investors want to take full advantage of Vietnam’s cheap electricity to make steel in Vietnam to export products to other countries.
Nghi, on one hand, admitted that the electricity price in Vietnam is truly lower than in other countries, on the other hand, said it is also necessary to note that the income of Vietnam is much lower than in other countries. Nghi thinks that foreign investors can see the great potentials in Vietnam and this is the main reason that encourages them to go to the country.
Formosa steel project in Vung Ang district in the central province of Ha Tinh has got allocated land. The joint venture project between Indian Tata Group and Vietnamese VnSteel still has not got license. The ground breaking ceremony of the project of Quang Lien group took place a long time ago, and it has changed hands four times, but the project still can not start.
To date, only the steel mill in Ba Ria – Vung Tau province with the capacity of one million tons, which has become operational, is using the electricity provided by EVN. Meanwhile, other projects still do not use electricity. “Therefore, we can not say that foreign investors take full advantage of the cheap electricity to make investment in Vietnam. I can say for sure that nowhere in the world, steel producers have to build power plants for themselves,” Nghi said.
“The proposal by EVN to force steel mills to build power plants for themselves is an unreasonable idea. Providing electricity is the EVN’s task, while it will be the responsibility of steel producers if the market lacks steel,” Nghi added.
The noteworthy thing is that the steel projects licensed in Vietnam in the last time all discussed with EVN about the electricity supply. “Why did EVN accept to provide electricity if it can not provide enough electricity?” he questioned.
Several months ago, EVN released a report, pointing out that Vietnam will still face the serious electricity shortage, if it continues providing electricity to steel projects which use backward technologies and gobble up too much electricity.
In the report, released in September 2010, EVN said that Vietnam now has 65 steel projects which have the capacity of 100,000 tons per annum. Though steel mills are running at 50 percent of capacity only, but they are consuming a big volume of 3.5 billion kwh a year.
According to VnExpress, EVN believes that the existence of steel mills which consume too much electricity has influenced the supply of electricity to other industries and households. The massive investment of steel projects in some localities has spoiled the power generation development plan. In Ba Ria-Vung Tau province, for example, the development plan has been adjusted seven times since 2006.
Tien phong newspaper has quoted its sources as saying that it takes $2000 to create one kwh of electricity. Meanwhile, it takes 4-6 years to build a power plant. Therefore, many experts have voiced their support to the proposal to force steel mills to arrange electricity for themselves.
Meanwhile, Nghi complained that the electricity shortage last summer has caused big losses to steel mills. The production cost of a ton of steel has increased to 2.5 million dong due to the electricity cuts. The problem is that mills have to spend additional money to heat up the furnaces after the electricity cuts.
vietnamnet
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