The list of thermal power plants in Vietnam having investment capital from China will be extended once Chinese investors are approved to take over Long Phu III thermal power plant located in the Mekong Delta province of Soc Trang.
The Ministry of Industry and Trade (MoIT) is collecting opinions from the local authorities on transferring Long Phu III thermal power plant from PetroVietnam to interested Chinese investors.
According to MoIT, after the prime minister approved transferring the above thermal power plant from PetroVietnam to other partners, two Chinese investors expressed interest in taking over the project.
The first one is China Southern Power Grid Co., Ltd. (CSG). It is the investor of the $1.75 billion Vinh Tan 1 thermal power project.
The second one is a joint venture of five Chinese firms, including Zhejiang Energy International Limited and WIN Energy Joint Stock Company.
According to MoIT’s opinion, both Chinese investors promised using modern equipment in the plant, while simultaneously ensuring that the construction will meet the schedule. However, the implementation model offered by the joint venture has more advantages.
Notably, if the project is implemented under the BOT model as proposed by CSG, MoIT is concerned that the construction will not meet the schedule, and as a result, the government would need to go into expenses to pay associated guarantees.
Meanwhile, under the independent power producer (IPP) construction model proposed by the Chinese joint venture, the government would not have to provide any guarantee for the project.
The proposal to transfer the project to other investor is to decrease the pressure on PetroVietnam to arrange investment capital to develop thermal power plants. At present, PetroVietnam is assigned to develop four thermal power plants, including Thai Binh II, Long Phu I, Song Hau I, and Long Phu III, as well as seven gas-to-power projects.
Previously, in March 2015 Tata Power Group from India proposed investing in Long Phu III thermal power plant under the BOT model. However, no more information has been published since then. The Long Phu III plant was expected to cost roughly $2 billion, with a capacity of 2,000MW.
Most recently, MoIT proposed the prime minister to assign Geleximco-HUI, a joint venture between Geleximco and Hong Kong United Co., Ltd., to develop Quynh Lap 1 plant, replacing the existing investor, state-run Vietnam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin).
The proposal was submitted as MoIT was worried about Vinacomin’s capacity to arrange investment capital. According to statistics from MoIT, as of September 2017, Vinacomin was bearing debts of VND78 trillion ($3.4 billion), with a debt-to-equity (D/E) ratio of 2.5.
To date, the $1.75 billion Vinh Tan 1 thermal power project is the largest Chinese-invested project in Vietnam. According to the latest report of the management board of the project, the first unit will come into commercial operation this month, five months earlier than initially scheduled.
Vinh Tan 1 is expected to provide more than 7.2 billion KWh per year, increasing the southern region’s electricity supply and helping reduce the region’s dependence on hydropower—especially during the dry season or droughts.