Bac Lieu LNG-fired thermal power plant’s electricity price raises controversy
Bac Lieu LNG-fired thermal power plant’s electricity price raises controversy
The selling price of electricity generated at the Bac Lieu liquefied natural gas (LNG)-fired thermal power plant remains controversial as the Ministry of Industry and Trade has calculated a price of 8.39 U.S. cents per kilowatt hour, while the investor has committed to a price of seven U.S. cents.
The Ministry of Industry and Trade has proposed the Government add the project to the National Power Development Plan VII.
According to the ministry, with a price of seven U.S. cents per kilowatt hour being proposed by the project investor, Singapore’s Delta Offshore Energy Company, the project’s scale and phases should be reviewed carefully to avoid affecting similar projects in the future.
It is necessary to develop 355 kilometers of 500-kV transmission lines, requiring a total estimated investment of US$285 million, for the Bac Lieu LNG-fired thermal power plant.
The transmission line’s development will raise the cost of the project, thus increasing the electricity selling price.
In addition, the seaport handling LNG for the plant is 35 kilometers from the mainland, which will also raise the price.
Under the prevailing regulations, the price of LNG sold to the plant will be US$8.37 per British thermal unit. With an operation time of 6,000 hours per year, the price of electricity generated at the plant must be 8.39 U.S. cents per kilowatt hour, without accounting for the cost of the transmission lines.
The investor has contributed only 15% of the investment of more than US$4 billion. The remaining 85% has yet to be guaranteed by banks, affecting the feasibility of the project.
The Ministry of Planning and Investment has also urged the Bac Lieu government to ask the investor to clarify its capital mobilization capacity and plan for providing sufficient capital.
The Bac Lieu government signed a memorandum of understanding on the project with Delta Offshore Energy Company in December last year. Work on the project was expected to start late next year and finish in late 2024.
