It is absolutely
within the reach of sugar plants to spend money on building electricity plants.
However, the fact that the Electricity of Vietnam, the only wholesale buyer,
always set the purchase prices at low levels do not encourage sugar plants to
invest in power.

For
the last many years, sugar refineries have been criticized for wasting energy
because they have not take full advantage of byproducts to generate
electricity. However, the above said reason can explain why.

In
2007, the Soc Trang Sugar Refinery in Soc Trang province spent 40 million
dollars (80 billion dong) to buy equipment for the building of a power
generation plant. It was estimated that with the existing bagasse, the plant
would earn
back the investment capital after ten years of investment, if it could sell
electricity at 1500 dong per kwh. However, EVN only accepts to pay low prices.
As a result, Soc Trang has not taken back the investment capital and it still
has to pay bank debts.

Who decides the electricity prices?

Trinh
Minh Chau, General Director of the Soc Trang Refinery, said that if the company
had not pay the 80 billion dong to build a power generation plant, it would
have to see a big volume of bagasse to be wasted every year, while the company
would have to pay money for treat the bagasse to avoid the environment
pollution.

Therefore,
the company finds is necessary to build a power plant which can help both bring
more money to the company from the electricity sale, and help increase the
capacity of refinery from 2500 tons of sugar cane per hour to 3000 tons.

“In
early 2007, the company set up the investment project. In mid 2007, equipment was imported from China and the construction of the
power plant was completed one year later,” Chau said.

However,
Chau could not imagine that it would take so much time to negotiate with EVN
about the electricity sale. Chau had to come to the southern power company, a
subsidiary of EVN, many times in 2008 and 2009 to follow necessary procedures
to sell electricity. Everything of the power plant, from screw to knife-switch
must meet the technical standards set by EVN.

However,
the toughest problem in the negotiation was the electricity price.

“We
were asked to give all details about the production costs. We offered to sell
electricity at 1500 dong per kwh to be able to take back the investment
capital, but they only accepted the price of 660 dong per kwh,” Chau said.

In
the 2010-2011 sugar cane crop, Soc Trang sold 6 million kwh to EVN and it
earned only 4 billion dong, while it had to pay 6 billion dong to banks.

According
to Nguyen Van Loc, General Director of the Bien Hoa Sugar Refinery, EVN always
thinks that the electricity generated from bagasse has the low production
costs, because bagasse is just a kind of “redundant energy” of the sugar
production and sugar refineries do not have to pay money to buy the material.
Therefore, EVN always sets the electricity prices at low levels.

Directors
of other sugar refineries also complain that in the negotiations with EVN,
sugar refineries cannot have their voices, because EVN is the only buyer.

Which prices are right?

“Bien
Hoa Sugar Company drew up a project on purchasing electricity generation
equipment several years ago. We do not lack money, but with the current
electricity pricing mechanism, it will be very difficult to take back the
investment capital,” Loc said.

Do
Thanh Liem, General Director of Khanh Hoa Sugar Refinery, said that the
electricity sale contracts have the validity for one year, and he is so afraid
of negotiating again to renew the contracts.

“It’s
up to you. We just can pay at that price levels, or we will not buy” is always
the final answer of EVN.

The
electricity prices at which EVN is buying from sugar refineries are different.
It pays Khanh Hoa 520 dong per kwh, while it pays Soc Trang, Gia Lai and
Bourbon 660 dong, and pays Lam Son nearly 700 dong.

Source: SGTT