Vietnam go-ahead for $4.2bn in coal-fired power investment
The investors of the Hai Duong and Mong Duong 2 plants, both "independent foreign power producers", have now completed administrative procedures which green-light their projects' construction, according to Vietnam Business News.
Late last month Malaysia's Jaks Resources Bhd finally received an investment certificate for its USD2.25 billion coal-fired project in northern Hai Duong province after several years of protracted negotiations. The company now has 15 months to stump up the finances for the project with the first turbine due to spin up in 42 months, according to the investment certificate.
The 1,200 megawatt Hai Duong coal-fired power plant is the fourth build-operate-transfer (BOT) power project in Vietnam to be funded by a foreign independent power investor, following Phu My 3, Phu My 2.2 and Mong Duong 2.
In regards to the second approved project, Mong Duong 2 in northern Quang Ninh province, Prime Minister Nguyen Tan Dung recently ordered the Ministry of Planning and Investment (MPI) to issue an amended investment certificate following a change in ownership structure of the builder.
In February, US-based multinational AES Corporation sold 30 percent of its stake in AES-VCM Mong Duong Power Co Ltd to South Korea's Posco Power Corp and 19 percent went to China Investment Corporation, China' sovereign wealth fund, after Vietnam's state-owned coal miner Vinacomin pulled out of the project.
The new joint venture can now push ahead with construction of the USD1.95 billion 1,2400-MW plant, which was initially scheduled to start this month. On Monday the joint-venture announced that it had secured USD1.45 billion in financing from consortium of 12 foreign banks.
Once completed in 2014, the two projects will help ease the severe electricity shortfall in Vietnam, which is of great concern to foreign investors in the country. On average, the electricity outage hours for each firm almost doubled from 50 hours in 2009 to 89 hours in 2010, according to a report of the infrastructure working group at Vietnam Business Forum.
The situation is particularly serious during the dry season as the output of hydroelectric power plants, which make up around 40 percent of the country's installed capacity, reduces dramatically.
Over the next five years, Vietnam's electricity consumption is projected to rise 15 percent while the supply may grow 14.5 percent. Through to 2020 Vietnam plans to have 95 new generating plants with an estimated total capacity of 49 GW, requiring USD39.58 billion of capital.
Vietnam is cutting coal export this year to save the fuel for power plants and has imported the first cargo of Indonesian thermal coal as it grapples with rising demand for power and has to continue to buy electricity from southern China among measures to avoid outages.
In common with is South-east Asian neighbours, coal appears to be fuel of choice for closing the energy-gap. According to a recent report from Wood Mackenzie, a shift to coal in the region's fuel mix has already started with 35 GW of committed coal-fired plant being developed in Indonesia, Malaysia, Thailand, Vietnam and even on a smaller scale in Singapore.