Pertama has too much electricity; could be a catalyst for? There...

Pertama has too much electricity; could be a catalyst for?
There has been a lot of debate on the possibility of OMH and AML joining forces in Malaysia where both operate ferrosilicon and manganese smelters. And, electricity might be the key.
AML’s Pertama Ferroalloys smelting is paying for power it can’t use. AML’s Hirotaka Suzuki said the company could only consume 145 MW out of 170 MW under a 20-year power purchase agreement between the company and Sesco, the Malaysian power company, and was forced to pay RM4-million per month for the surplus 25W under a “take or pay” clause. Under the deal, Pertama agreed to buy 270 MW, 170 MW under phase one and an additional 70 MW under phase two at preferential prices.
The matter is now being mediated. One solution would be for Sesco “take back” the electricity in return for higher power prices in the future to make up for the loss.
Pertama Ferroalloys’ request to sell the power to a third party was initially rejected. Suzuki was quoted as saying: “I have found buyers (manufacturing plants) for that 25 MW as they require more power for their (expanding) operations. There is no loss to Sesco (to transfer the 25 MW to the new consumer). It is okay for us to pay for the 25 MW if there is no buyer for that power.”
Suzuki said two other energy-intensive industries, including Japan’s Tokuyama, were faced with a similar problem in paying for unconsumed power under the PPAs. Tokuyama sold its polysilicon plant in Samalaju to South Korea’s OCI last year at a huge loss.

By alanpatrickryan
On July 27, 2018
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