Power investors set to enter last chance saloon

It will urge the investors to compile the build-operate-transfer (BOT) contract of the project before June 2013, or risk the project falling to other interested and potential investors.

This decision came after a recent meeting that reviewed the development of power plants under the umbrella of the Seventh Power Master Plan approved last July.

Van Phong 1 is within the 2,640MW Van Phong coal-fired power center costing $3.8 billion which will be built under a BOT contract for a lifespan of 25 years. The joint venture investors are Japanese Sumitomo and Vietnamese Hanoinco Company.

The investors were required to accelerate implementation of the 1,320-MW plant to prevent possible negative impacts on social security and development of the Van Phong Economic Zone as the site has been cleared  for construction, the local authorities said on its official website last week.

Sumitomo’s chief project developer, Nguyen The Vinh, told VIR that Sumitomo was still eager to move forward on the 1,320 megawatt thermal power plan Van Phong I.

“We are trying our best to get back to negotiating plans soon. Only one or two months later, we expect to start negotiating BOT contract so we would not miss this set deadline,” said Vinh.

Going forward, Sumitomo, together with the Vietnamese governmental agencies concerned, will conclude formal project contracts, including BOT contract. Vinh added that Sumitomo would also consider arranging project financing from Japan Bank for International Cooperation and other banks, while selecting contractors for the plant construction

Negotiations over prices of selling electricity and the conversion of foreign currency are considered the hardest jobs for foreign investors in Vietnam’s power sector and such negotiations could takes years to complete.

Under the Document 1604/TTg-KTN issued last year providing incentives for developing BOT power projects in Vietnam, the Vietnamese government agreed to provide guarantees for conversion into US dollar for 30 per cent of a project developer’s revenue in VND. But  the investors of Van Phong I project have requested to 100 per cent foreign currency exchange guarantee.

Though the Vietnamese government has been calling for foreign investments into the country’s power sector, only three foreign investors have been so far involved in BOT power plants in
Vietnam.