Projects on manufacturing power equipments may “die young”

In order to ease the reliance on foreign technologies, Vietnam has been determined to manufacture equipment for power, cement plants and other industries. However, the projects on manufacturing equipments in the trial basis have not been successful.

The slow implementation of thermal power plants, the high trade deficit with China caused by the dominance of Chinese contractors in EPC (engineering, procurement, construction) contracts have worried the public.

A question has been raised that how far the project on researching and manufacturing synchronous equipment for coal-run thermo power plants has gone.

The project, or trial EPC project for short, was approved by the Government in 2009. At first, the project aims to manufacture equipments for 300 MW power plants. However, later, the manufacturers have asked to design the equipments for 600 MW power plants, because the latest power generation development plan does not include 300 MW plants any more.

It is expected that the results of the research and design would be applied to the Hai Phong 3 Thermal Power Plant (600 MW) and Long Phu 2 (600 MW) which is now under the preparations for construction.

The project has been launched after the government realized that the demand for equipment for coal-run thermo power plants is very big. It is expected that by 2015, the total designed capacity of coal-run power plant would reach 106,000 MW out of the total capacity of 170,000 MW (62 percent).

If Vietnam can design, manufacture and supply equipments for the power plants, it would be able to control the investments in the power plants, thus allowing to ensure the energy safety and help reduce the trade deficit.

As for hydropower plants, the values of equipment and installation just account for 20-30 percent of the total investment capital, while the technologies do not change regularly. Meanwhile, at thermo power plants, the money spent on equipment and technologies always account for high proportions of 75-80 percent, while technologies change regularly. It would be a heavy task to undertake the wok of EPC contractor, but the turnover proves to be very attractive.

According to Nguyen Van Thu, Chair of the Vietnam Association of Mechanical Engineering Industry (VAMI). Up to 30 Chinese enterprises are working as EPC contractors, or as big investment partners for 41 big projects in Vietnam, mostly in the field of thermo power.

“98 percent of the technologies are Chinese as well,” said Ta Van Huong, former Director of the Energy Department under the Ministry of Industry and Trade.

The decision to run the project on manufacturing equipments for the two power projects was applauded, because this was considered the good opportunity for domestic mechanical engineering companies.

However, Ngo Van Tru, Deputy Director of the Heavy Industry Department under the Ministry of Industry and Trade, has informed that the trial EPC project on the two power plants has finished. One year ago, the Government decided that domestically made equipments would be applied to Quynh Lap 1 in Nghe An province.

If domestically made equipment had been used for Hai Phong 3 Power Plant as previous planned, the EPC contract worth 500 million dollars would not have fallen into the hands of the joint name of Chinese Dongfang and Chinese Marubeni.

The decrease of the number of pilot projects (from two to one) can partially say that bad preparations of the involved parties in the implementation of the project. Quynh Lap 1 project is still under the stage of feasibility project compilation, and it is still not clear when it will be implemented in reality, according to Tru.

Meanwhile, Thu from VAMI said that the failure in the two pilot projects was caused by the problematic project management and the low capability of designing package deals. – TBKTSG

Tags: power equipments