Slow BOT projects face huge fines

Companies involved in developing BOT power projects could face $200,000 dollar fines for late work
Photo: Le Toan

This stringent measure has been suggested by the Ministry of Finance (MoF) to the Ministry of Industry and Trade’s (MoIT) draft measures to speed up the contruction of power plants, so as to ensure power supply plans remain on track.

In addition to the fines facing tardy investors, the MoIT can report unreliable investors to the prime minister for dismissal.

However, the MoF stated that “The punishment only applies to investors making slow progress on projects that they have control over.”

“Progress targets should be major milestones over the span of the projects,” the MoF added.

Vietnam’s electricity demand is expected to see a remarkable increase of more than 10 per cent per annum in the coming years due to rising population and economic growth. Southern Vietnam in particular, the country’s largest economic hub including Ho Chi Minh City, faces a critical situation in relate to the current imbalance between the existing supply and the increasing demand for electricity. There is therefore an urgent need for the development of power generation plants throughout the region.

Over the past 15 years, only five power plants have been licensed to foreign investors under the build-own-operate (BOT) model. They are Phu My 3, Phu My 2.2, Mong Duong 2, Hai Duong, and Vinh Tan 1.

The list of foreign-invested BOT power projects will increase as several foreign companies are currently in negotiations, or are conducting feasibility studies for developing power plants nationwide such as South Korea’s Samsung C&T Corporation, India’s Tata Power, Singapore’s Sembcorp Industries and Thailand’s EGATI.

Industrial insiders said that the negotiation over power prices between foreign power plant investors and the state-run Electricity of Vietnam (EVN), the country’s sole electricity buyer, was a headache that could possibly lengthen construction deadlines.