Energy projects to power up FDI figures

Multi-billion dollar foreign-invested power projects are anticipated to be a shining light in Vietnam’s 2010 foreign direct investment picture.

According to the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency (FIA), files are being drawn up so that long-delayed American AES Corporation’s $1.4 billion Mong Duong 2 coal-fired power plant can be licenced by the middle of January, the effective date of the new Decree 108/2009/ND-CP governing build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) projects in Vietnam.

“The prime minister has urged the Ministry of Industry and Trade to quickly complete the two most important contracts of the project, one to sell electricity to Electricity of Vietnam Group and the other to buy coal. Then the MPI can evaluate and issue an investment certificate for the project by D-day,” said an FIA senior official.

For more than four years, AES has pursued investing in the Mong Duong 2 plant with a designed generation capacity of 1,200 megawatts in the BOT form in northern Quang Ninh province, one of Vietnam’s richest coal regions.

The US firm and Vietnam Coal and Mineral Industries (Vinacomin) signed principal agreements to develop the Mong Duong 2 plant, in which AES would hold a 90 per cent stake, on the sidelines of the Asia Pacific Economic Cooperation (APEC) Leaders’ Meeting in Hanoi in November, 2006.

The FIA official said Mong Duong 2 would become a model for other foreign-invested power projects in the BOT form, which had hit slow progress in negotiations with the Vietnamese side relating to coal and electricity prices.

Major projects include China Southern Power Grid Company and China Power International Holding Company’s 1,200MW coal-fired power plant in partnership with Vinacomin in southern Binh Thuan province, Malaysian Jaks Resources’ 1,200MW coal-fired power plant in northern Hai Duong province and Malaysian Janakuasa’s 1,200 MW Duyen Hai 2 in Tra Vinh province.

Currently, Phu My 2.2 and Phu My 3 are Vietnam’s two major foreign-invested power projects. However, no foreign investors have successfully negotiated in investing in power plants in Vietnam since 2001.

“If the [aforementioned] projects could be licenced altogether in 2010, they would be a breakthrough in the country’s foreign direct investment (FDI) attraction and drive the capital toward an industrial focus as we wish,” said the official.

According to the FIA, Vietnam is expected to receive $22-25 billion in newly registered and expanded FDI capital this year, an increase of 5-10 per cent from 2009 on the back of international analysts’ predictions for the inflow rebound happening in 2011.

The country’s newly registered and expanded FDI capital was hit hard by the global crisis during 2009 with a sharp 70 per cent drop from 2008 to $21.48 billion.

Foreign-invested projects focussing on hotels and restaurants topped the FDI list in 2009 with total newly registered and expanded capital of $8.79 billion, followed by property ($7.6 billion) and manufacturing projects ($2.96 billion).

VietNamNet/VIR

Tags: Vietnam energy, Vietnam investment, Vietnam power projects