Oxbow reconsiders ill-fated Vietnam power project
HANOI - U.S.
firm Oxbow Energy Corp is
considering whether it should step
back into an ill-fated $360 million
Vietnam power project following a
new offer from Hanoi.
A source close to the plan to
develop the 300 megawatt coal-fired
power station said on Wednesday
Oxbow was reconsidering the
project's ``inactive'' status after the
government proposed a new tariff
and supplies structure.
``It is the first written tariff position
taken by the Vietnamese side that I
can remember in four and a half
years of project development,'' said
the source, who declined to be
identified.
``The sponsors are evaluating
whether it would be worth the time
and expense to take the project out
of inactive status.''
Oxbow declined to comment, saying
all negotiations would remain private.
Officials from Vietnam's industry
ministry, which suggested the latest
offer, were not immediately available.
Oxbow had won a bid for the plant
in 1996, but the landmark 20-year
build-operate-transfer project has
been stalled, partly due to problems
over pricing the electricity and the
cost of coal supplies from state
monopoly Vinacoal.
Oxbow would have to sell the power
to state monopoly Electricity of
Vietnam (EVN).
The source close to the project said
if Oxbow did agree to reactivate the
project, it would have to reconfigure
plans in order to come closer to the
new Vietnamese offer, which was
not substantively different from
previous positions.
The official Kinh Te Vietnam & The
Gioi reported this week that the
government had approved the new
offer on April 20.
It said the power would be priced at
five cents per kilowatt/hour during
the first five years. From year six to
year 10, the price would be six cents
and for years 11 to 20, it would drop
to 4.5 cents per kWh, the magazine
said.
The project, in northern Quang Ninh
province, was also assured a flat
concessionary profits tax of 10
percent for its 20-year life and
guaranteed coal supplies at $18 per
tonne.
One power industry expert said the
new offer appeared to be almost in
line with Oxbow's original bid for the
project, which had requested five
cents per kWh. But he added that by
last year Oxbow had revised its
demands to around 6.5 cents per
kWh.
Sam Korsmoe, managing director of
Ho Chi Minh City-based Mekong
Research, said Oxbow likely revised
its pricing and projections due to a
slowdown in power demand growth
in northern Vietnam and on
expectations of surplus generating
capacity.
The Vietnamese dong currency had
also depreciated against the dollar by
around 20 percent since 1997, and
EVN would be reluctant to raise its
prices to consumers, Korsmoe said.
Reuters - April 28, 1999.
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