Cavico Signs Emission Reductions Sales Agreement
Cavico Corp. (NASDAQ: CAVO), a leading Vietnamese infrastructure engineering & construction, infrastructure investment and natural resources company, today announced that its majority owned subsidiary, Cavico Transportation JSC, signed a carbon emissions reduction (CER) sales agreement related to the operations of the Company’s Cau Dat wind power plant being built in Lam Dong province. The agreement, known as a Clean Development Mechanism (CDM) Emissions Reductions Purchase Agreement, was made with Swiss-based Carbon Resource Management S.A. (CRM). Once the Cau Dat wind power plant is operational, Cavico Transportation and CRM will finalize the financial terms for Cavico’s CERs.
According to the terms of the agreement, CRM agrees to purchase all the CERs generated by Cavico from the Cau Dat project for 7 years after the startup of the plant, which Cavico expects to begin operations in 2014. After the expiration of this contract, Cavico has the option to continue the agreement with CRM or to select another purchaser that may give it more favorable financial terms for its CERs. The selection of the CDM partner was made under a Kyoto Protocol mechanism to assist industrialized countries in reducing their greenhouse gas emissions. It allows Cavico to negotiate the price of electricity with the Vietnamese government and profit from the reduction in carbon emissions. According to the initial studies, Cau Dat plant will reduce on average 37,000 tons of CO2e per year (1 CER is equivalent to 1 ton of CO2e). Currently, the market price of one CER unit is approximately $15.
As previously announced, Cavico received approval from the Lam Dong province to develop the Cau Dat Wind Power project. Upon completion, the 30-Megawatt wind power plant will be connected to the national grid. The wind power plant may eventually be expanded to 100-300 Megawatts. In September 2009, Cavico hired Altus AG of Germany, an international renewable energy project development company based in Karlsruhe, to consult on a technical feasibility study and wind measurements.
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