Province’s money issues menace Sembcorp timeline

Quang Ngai People’s Committee last week sent a document to Prime Minister Nguyen Tan Dung crying out for financial support for site clearance and construction of resettlement areas.

Le Viet Chu, Chairman of the committee, said about 1,000 households would have to move before the second quarter of 2016 if Sembcorp’s project is to go ahead on schedule.

“The capital demand is huge, and it is well beyond our provincial budget,” he said.

Chu, however, did not specify a total amount for the needed support, only asking for an initial VND1.5 trillion ($71 million) this year to build resettlement areas.

Sembcorp Utilities, a subsidiary of Sembcorp Industries, announced the $2.5 billion project in September 2011. In January 2012 the investor signed a memorandum of understanding with Quang Ngai to study the feasibility of the build-operate-transfer (BOT) project. The BOT model means Sembcorp would own and run the power plant for a fixed time after which the Vietnamese government would take over.

The 1,200 megawatt power plant, located in Dung Quat Economic Zone, is aimed at enhancing the power supply in Quang Ngai province and throughout the central region, which have emerged as popular destinations for industrial manufacturing projects in recent years.

This is the second power project Sembcorp has been involved with in Vietnam. Ten years ago the Singaporean investor, in partnership with Kyushu Electricity, Sojitz Corporation and BP, invested in the 749MW Phu My 3 power plant.

At present, Sembcorp Utilities is in negotiations with the Electricity of Vietnam and Ministry of Industry and Trade over the power purchasing agreement and BOT contract, respectively.

Quang Ngai People’s Committee said Sembcorp required the committee to complete site clearance of an 80 hectare area by the first quarter of 2016, when the investor plans to start construction to successfully put it into operation by the third quarter of 2020.

If the committee fails to complete clearance of the site within the above timeframe, the project could face delays.