PV Power silent about Nhon Trach 3 and 4 thermal power projects

PV Power has made no progress on Nhon Trach 3 and 4 thermal power projects

According to Ho Cong Ky, chairman of the board of directors of PV Power, the company has being preparing for the construction of two projects, namely Nhon Trach 3 and 4 thermal power plants located in Ong Keo Industrial Zone (IZ) in the southern province of Dong Nai.

To date, the government approved the investment planning and pre-feasibility study report of Nhon Trach 3 and 4. PV Power is selecting the contractor for building the feasibility study (FS).

“PV Power targets to complete the FS in this year in order to submit it to the board of directors and seek approval from the shareholders' meeting. Besides, the company expects to take Nhon Trach 3 and 4 plants into pilot operation by the end of 2022 and commercial operation in 2023,” Ky said.

However, in reality, it is difficult for the company to reach this deadline because Document No.58/BC-BCT of the Ministry of Industry and Trade reports that in the adjusted Power Development Plan VII these two projects, which have the capacity of 750MW per plant, were expected to start operations in 2020 and 2021, respectively. The construction duration would be 3.5 years for each plant, but in mid-2019 there has been no official move to begin construction.

Besides, the selling price of electricity at the Nhon Trach 3 and 4 projects is also a concern for the investor as the projects will use LNG imported from the Thi Vai storage terminal. However, according to the forecast mentioned at Document No.58/BC-BCT, after 2022, the southeastern region will run out of gas, which will have to be offset by LNG, thus, the supply of LNG for Nhon Trach 3 and 4 may be impacted.

In addition, using LNG will make electricity production more expensive, which will push up the selling price by VND2,500 per kWh. Thus, the current selling price on the market (VND1,864 per kWh) would not ensure profitability for the two projects.

Another challenge is the government guarantee for loans. With the total capacity of 1,500MW of the two projects, the estimated capital is $3 billion, $1.5-2 billion of which comes from loans, thus, if there is no guarantee from the government, the investor will face difficulties in arranging capital.

Previously, the prime minister approved the proposal of PV Power to take over the two projects from PetroVietnam after collecting the opinions of ministries and relevant authorities.

According to the plan, the two thermal power plants will cover an area of 34 hectares and have the total investment capital of VND33.3 trillion ($1.46 billion), with the generation capacity of 750-800MW each.

PV Power will spend VND9.99 trillion ($438.29 million) of its equity and VND23.31 trillion ($1.02 billion) from loans to develop the two projects.