Cavico Receives Investment License for Tan My Hydropower Plant
GlobeNewswire “Press Releases”
HANOI, Vietnam , April 4, 2011 (GLOBE NEWSWIRE) — Cavico Corp. (Nasdaq:CAVO) (“Cavico” or the “Company”), a major infrastructure, civil engineering design, and construction conglomerate based in Vietnam , today announced that its subsidiary, Cavico Mining, has received an investment license for the Tan My Hydropower Plant. The license was issued to Cavico Tan My Trang An Hydropower Company (“Cavico Tan My”), a majority-owned subsidiary of Cavico Mining, by the People’s Committee of Ninh Thuan Province . Cavico Tan My was founded by Cavico Mining to undertake this project.
The license grants Cavico Tan My the right to build, own and operate a hydropower plant downstream from the Tan My Irrigation Reservoir . The plant will be built on an area of approximately 280,000 square feet in Phuoc Tan Village , Ninh Thuan Province . The plant has a designed capacity of 6 megawatts and is expected to produce approximately 25 million kilowatt-hours (kWh) of power annually. At the expected rate of $0.05 per kWh, the plant will generate $1.25 million per year in total revenue. The total estimated investment cost of the project is $6.7 million , or approximately $1.1 million per megawatt.
Cavico Mining has engaged the Institute of Hydro and Renewable Energy (“IHR”) as a consultant to carry out a feasibility study and create a design for the project. For more information about IHR, visit http://www.ihr.org.vn/.
Cavico expects to realize significant cost benefits by constructing the plant downstream from the Tan My reservoir. According to IHR, building a hydropower plant downstream from an existing reservoir can reduce construction costs by approximately 50% by eliminating substantial costs related to site clearance and the construction of access and transport roads, water canals and tunnels, dams, reservoirs and other infrastructure, which can result in total construction costs as high as $2.5 million per megawatt.
“Building a hydropower plant downstream from an existing large reservoir greatly reduces our construction and operating costs and maximizes our operating capabilities. Our plant will use a small percentage of the reservoir’s massive water supply, enabling the plant to operate continuously even during the dry season. In addition to the reservoir, we will only need to construct a turbine house and a canal to direct the water to the turbine house. We believe these cost savings will provide us with a higher return on our investment,” commented Mr. Hung Manh Tran , executive vice president of Cavico Corp. and chairman of Cavico Mining. “Cavico Mining will continue to negotiate with government agencies to obtain favorable electricity sales prices and with investors and bankers to secure project startup funds.”