Power project faces financial snafu

March 12, 2013 | 15:26

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Kien Luong thermoelectricity centre, to be one of Vietnam’s largest power centres, remains on paper as its investor faces financing troubles.

According to the government’s electricity master plan to 2020, the first phase of Tan Tao Group-backed Kien Luong thermoelectricity centre in southern Kien Giang province will start commercial operations at the end of 2013. However, the private investor is still tied up with site clearance.

Tan Tao Group was approved as the investor of the $7 billion centre, to include the Nam Du deep seaport, in 2008 to produce up to 4,400-5,200 megawatts.

The Kien Giang People’s Committee two weeks ago was told by the investor it had made little headway over the past two years, and the investor has just cleared 88 hectares out of 600ha.

In a report sent to the provincial committee, Tan Tao Group director Thai Van Men said the investor had disbursed $250 million into this project, but he admitted the project development had been delayed for two years because of financing trouble.

He said the firm was stalling construction because it had not received the government guarantee and undertaking agreement (GGU). According to Tan Tao Group, without GGU, the project will remain deadlocked.

Le Khach Ghi, director of Kien Giang Department of Planning and Investment, said Tan Tao Group might not receive GGU because “providing GGU to a foreign loan of a private enterprise is unprecedented.”

Furthermore, he said Tan Tao Group’s equity capital in this project had to equal to 20 per cent of total project’s investment capital, or $1.4 billion. According to the annual financial report of the company in 2012, its total debt was approximately $200 million.

Last year, central Quang Ngai province revoked the investment certificate for Tan Tao Group’s Tinh Phong Industrial Park as the provincial committee said the company did not have strong financial ability to develop it.

Phan Vu Hong, vice chairman of Kien Giang People’s Committee, said the provincial leaders were going to propose the government to reject Tan Tao Group from this mega power project in case the company did not resume the project construction before July 2013.