EVN gets cold feet over giant Formosa project

An EVN source has told Vietnam Investment Review EVN can only afford to pay the price it agreed in 2001, when Formosa signed a contract to build a 150 mega-watt power plant at its textile factory in Dong Nai province.
Under the contract, EVN would pay 4.5 cents per kWh for the first 60MWh supplied by the new plant.
If EVN bought between 60 and 120MWh, the price would be 3.5 to 4 cents per kWh.
“Now Formosa wants us to pay a flat rate of 5.4 cents per kWh. This pricing level is impossible because our current reselling price is lower than that,” the source said.
EVN sells its electricity for 5.2 cents per kWh, which covers any electricity losses and the cost of transmission.
“If EVN agrees to a price of 5.4 cents, we could lose $6.7 million each year,” the source said.
“We are trying to re-negotiate with the seller so that EVN and Formosa can agree on a price that benefits both sides.”
Senior officials from Hung Nghiep Formosa were not available to comment on the price dispute, but VIR understands building on the Dong Nai plant will not start until a price has been agreed.
EVN is currently buying the extra electricity it needs from foreign-invested companies Hiep Phuoc, Vedan, Amata, Nomura and Bourbon, which built their own power plants to meet their electricity needs.
The source said the price EVN had negotiated with these companies was based on the volume of electricity sold and was also dependent on demand.
This price structure allowed EVN to make a profit when it sold the electricity on.
Formosa received an investment licence in 2001 to build a multi-million-dollar textile complex on 300 hectares in Nhon Trach industrial park in the southern province of Dong Nai. The project aims to build textile, polyester, spinning, yarn and fibre facilities, a water plant and a $85 million power plant.
The company completed construction of the polyester facility and the first power generating unit in April.