AES grabs finance to fire up key power plant

The plant will address Vietnam’s desperate power shortages

The American corporation has sold 30 and 19 per cent stakes in AES-VCM Mong Duong Power Co. Ltd to South Korea’s Posco Power Corp and China Investment Company of China (CIC). The agreements were signed in Seoul recently.

AES said it was also waiting for Vietnamese government approval for the acquisition of 10 per cent stakes from the state-owned Vietnam National Coal, Mineral Industries Holding Corporation in the Mong Duong 2 coal-fired power plant in Quang Ninh province.

“The joint venture arrangements signed today will help ensure that the financing is properly obtained and the project construction schedule can be met successfully. We are very excited that strong partners like Posco Power and CIC are joining the project and we all share the common aim of making Mong Duong 2 a project that Vietnam will be proud of,” said Ian Fox, chief executive officer at AES-VCM Mong Duong Power Co. Ltd.

The $1.9 billion plant, which was granted an investment certificate last year, is one of Vietnam’s most important power projects. The 1,200 megawatt project, once operational, is expected to ease severe electricity shortages in the country.

Vietnam has great power sector potential as power demand in country is expected to grow at 17 to 22 per cent during 2006-2015.

AES Corporation said the project was expected to start construction in mid-2011. So far, roughly $1.4 billion of debt is being raised from international banks with the expected support of Korean export credit agencies.

AES-VCM Mong Duong Power Co. Ltd last December signed a $1.3 billion contract with Doosan Heavy Industries & Construction Corporation for building the power plant. Meanwhile, operations and maintenance for the project will be provided through the joint collaboration of AES and Posco Power.

Mong Duong 2 is the first foreign-invested coal-fired, build-operate-transfer power project in Vietnam since 2001. Previously, a joint venture between Japanese Sumitomo Group and TEPCO Company and French EDF Energy gained licence for investing into the Phu My 2.2 project and a consortium of Kyushu Electric and Sojitz Corporation, BP and SembCorp Utilities invested in the Phu My 3 project.