Kien Giang adamant about withdrawing Kien Luong 1 thermal power plant

Kien Giang stands its ground on withdrawing the Kien Luong 1 thermal power plant

Previously, Tan Tao Energy JSC (TEC) had submitted a petition to the Ministry of Industry and Trade related to Kien Luong 1 thermal power plant. Accordingly, the document stated that the elimination of the project from the planning was the main reason for the immobility of the construction.

Therefore, if the project is withdrawn, TEC requested compensation for itself and foreign investors equal to the amount they invested ($270 million), plus interest for the related loans taken up.

TEC also suggested the government to add the project to the National Power Development Plan.

In March 2016, Kien Giang province proposed the Prime Minister to remove the project from the Revised National Power Development Master Plan VII, to adjust and withdraw the investment policy of Nam Du deepwater port (a project tied to the Kien Luong 1 and 2 power plant projects).

At a meeting between the parties, Deputy PM Trinh Dinh Dung stated that as Kien Luong 1 and 2 power plants utilise B-gas turbines for power generation, their technology is outdated and does not match the power planning by 2030 approved by the government. Thus, one of the reasons why the power plants were removed from the planning is their potential environmental impact.

Accordingly, Deputy PM Trinh Dinh Dung also assigned the Ministry of Industry and Trade (MoIT) to re-evaluate the overall status of the project, including the project’s capacity and cost. In addition, the ministry was tasked with assessing the necessity of the Kien Luong 1 Power Plant and consider changing the raw materials used for the projects, as well as thoroughly evaluating the investor performance in developing the project.

Regarding TEC’s proposal to add the project to the master plan, the Kien Giang People's Committee stated that this is in the competence of the central ministries and branches.

"In the past years the project has been immobile, affecting the local socioeconomic development. Considering the inability of the company to implement the project, along with the project being removed from the master plan, the Kien Giang People’s Committee maintains its proposal to withdraw the project. The parties will be responsible for handling the problems under the current law," stated the report of the Kien Giang People’s Committee submitted to the government.

In 2011, the project became stagnant, the investor stopped paying land use fees and also failed to apply for extension for the payments.

Although the Kien Giang People's Committee has repeatedly urged and organised meetings between the parties, the project was not restarted.

Noteworthy in the report of the MoIT is the difference between the Kien Giang People's Committee and TEC’s report about the cost of the Kien Luong 1 thermal power plant.

Specifically, the report of the Kien Giang People's Committee in September 2017 said that TEC deployed site clearance, constructed houses for experts, and issued VND​​77.2 billion ($3.36 million) of compensation for resettlement in the project area.

However, TEC’s report said the unit had invested over $270 million to deploy the project.

Commenting on TEC’s report, an expert close to the project said that TEC needs to revise the entire project because when Kien Luong 1 project was withdrawn from the planning, it was only an idea backed up by a signed memorandum, without any investment decision.

In addition, TEC has not signed a BOT contract with the ministry, therefore, there are no grounds to ask the MoIT for compensation. So far, the project area remains vacant land, which makes it difficult to believe that the investors spent hundreds of millions of dollars on the project.