India’s KCP offers sweet deal on power generation

KCP general director K.V.S.R Subbaiah said a six megawatt (MW) facility and a 15 MW facility fuelled by cane bagasse, the pulp that remains after the sugar has been extracted, would be built for an estimated cost of $13 million.
“We have written to the Ministry of Industry (MoI) and EVN about our plan, and we want to negotiate the electricity price with EVN before we start building the two facilities,” said Subbaiah.
He said KCP wanted to sell the electricity for 4.5 cents per kwh, which would allow EVN to make a profit when it resells the electricity at its current price of 5.2 cents.
“We have not yet received a response from EVN, but we hope to have talks with both the MoI and EVN soon to help us establish firm plans,” Subbaiah said.
KCP built a 6MW power plant in 2001 to provide electricity for its existing sugar processing mill in the southern province of Phu Yen. KCP’s 40,000-tonne sugar mill presently uses 80 per cent of the power produced at the plant.
KCP has planned to double its sugar production output to 80,000 tonnes before 2006, when Vietnam’s sugar industry becomes fully integrated in the regional free trade area.
“The plan to build additional power facilities will help us utilise all leftover cane products. I also hope that selling extra electricity to EVN will produce a small profit,” he said.
An official at EVN said the company would consider KCP’s offer, but noted that EVN’s 220 MW Ba Ha hydro-power plant would satisfy the province’s electricity demand.
EVN started construction on the plant this April, and it is slated to begin operating in December 2007. EVN estimated the total construction cost of the plant at $283 million.
At present, the French-bankrolled Bourbon sugar company in the southern province of Tay Ninh is the only sugar producer selling extra electricity to EVN. Bourbon built its 24 MW power plant in 1996 and started to sell extra electricity to EVN in 1999.
Bourbon said its sugar processing mill used up to 10 MW from its power plant and then sold the remaining output to EVN at an undisclosed price.
The sale price of electricity is considered a ‘sensitive’ matter for foreign-invested enterprises interested in selling extra electricity to EVN.
Last month, the $400 million Formosa textile complex in Dong Nai province proposed that EVN increase its electricity selling price to 5.4 cents per kwh when it sold extra electricity output from its 150 MW power plant to EVN.
However, EVN did not respond to the query, claiming that the price Formosa suggested was unrealistic.
EVN is presently buying extra electricity from the foreign-invested Hiep Phuoc, Vedan, Amata, Nomura and Bourbon enterprises, which built their own power plants to fulfill their electricity demand.
The EVN official said the price EVN had contracted with these sellers was negotiated based on volume, demand and profits.