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