New high hopes raised on bot power projects

The construction of two BOT power projects: Hai Duong and Mong Duong 2, just within a week, has once again raised the high hopes on the returning of the investments under the mode of BOT (build-operation-transfer).

After six years of negotiation and preparation, the construction of the main unit of the 1120 MW Mong Duong 2 power plant project, capitalized at 1.95 billion dollars was started last week. This has been described as the good news for the Quang Ninh province’s economy and for foreign investors as well, because this shows that foreign investors now can find good opportunities when investing in the power sector.

At the ground breaking ceremony of the Mong Duong 2 power project, Deputy Minister of Industry and Trade, Le Duong Quang, emphasized the important role of the plant in the implementation of the power generation development strategy in 2006-2015 and of BOT power projects.

The BOT invested Phu My 3 power plant was completed in March 2004. After that, the Phu My 2.2 power plant was completed in November 2005. And none of the project had been kicked off until now.

Prior to that, on September 9, the 1200 MW Hai Duong Power Plant project was also kicked off.

Both of the two power projects with big designed capacities of 1200 MW have the project development undertaken by foreign investors under the mode of BOT. Therefore, they have caught the special attention from the public.

The BOT Mong Duong power project will be developed by the US AES Group, South Korean Posco Power, and Chinese CIC which contribute 51 percent, 30 percent and 19 percent of capital, respectively.

Initially, the project was developed by the US AES and the Vietnamese Coal and Mineral Industries Group (Vinacomin). However, Vinacoal later decided to give up the project, and AES quickly found out new investors – Posco Power and CIC which not only overtook the 10 percent of stakes from Vinacomin, but also contributed more capital to raise their ownership ratios to 49 percent.

Becoming a 100 percent foreign invested project, but the conditions of the project implementation were negotiated on the basis of foreign-invested BOT project. Therefore, the new investors of Mong Duong 2 did not meet with any difficulties in having the investment license amended.

Just one month after getting the new investment license in July 2011, the investors completed the arrangement of the loan worth 1.46 billion dollars from KEXIM and KSURE and 12 international commercial banks.

Paul Hanrahan, President and CEO of AES Group, said that with the project, the investors want to make their contribution to the sustainable development of Vietnam’s economy. He has also revealed that the EPC contractor of the project is Doosan Heavy Industries Vietnam Co. Ltd and its subsidiaries.

As planned, the Mong Duong power plant will be put into commercial operation in July 2015 and generate 7.6 billion kwh or electricity a year. After 25 years of operation, the Mong Duong BOT power plant will be handed over to Vietnam.

As such, if both the Mong Duong 2 and Hai Duong projects can be completed on schedule, the national power grid will have 15 billion kwh of electricity a year which will serve the socio-economic development of the country.

As such, it took the two BOT projects six years at maximum to complete the steps of the negotiation process. Commenting about this, experts say that the time needed to negotiate for a BOT power project still has not been shortened as expected, if compared with the two projects of Phu My 2.2 and Phu My 3 conducted 15 years ago.

Sources say that nine other BOT power projects are under negotiations and Vietnam has high hopes to speed up the negotiations to soon start the construction.

Under the power generation plant development system in 2011-2020, Vietnam needs five billion dollars a year in investment capital.

Source Vietnamnet

Tags: Vietnam energy, Vietnam energy industry, Vietnam Energy sector