Tokyo-headquartered Sumitomo Corporation, which four years ago announced plans to build a giant power plant in Vietnam, will still wait for more time to finalise the build-operate-transfer contract to push its project forward.
The power plant will be located in Van Phong Economic Zone in central Khanh Hoa province, where South Korean Posco Group was previously rejected to build a $5 billion steel manufacturing factory and power plant complex due to concern over the impact on Van Phong international transhipment seaport.
A source at the Ministry of Industry and Trade (MoIT) told VIR that BOT contract negotiations faced delays because the ministry and the foreign investor had not reached agreements on government guarantees for the project.
“Negotiations are taking much longer than we initially expected. This affects lives of local residents living in the project site,” said Nguyen Trong Hoa, director of Van Phong Economic Zone Management Authority.
Hoa said the provincial people’s committee had spent around VND150 billion ($7.2 million) on land compensation and site clearance for the project since 2010, and many residents living in the site were concerned over their future as they did not know when the project would take off the ground.
“Given all the information I got, the BOT contract negotiations can be completed after the third quarter of this year,” said Hoa.
In November 2009, Sumitomo officially announced it would embark on Van Phong 1 thermal power plant with the estimated investment capital of 200 billion yen, or $2.19 billion at the current exchange rate.
The BOT power plant will comprise two 660 megawatt boiler turbine generator units. The Japanese firm planned to complete the construction and start commercial operation of the plant in 2015.
However, as the negotiations take longer time, Sumitomo is now unable to meet its initial schedule.
Once licenced, Van Phong-based plant will be the second Sumitomo-invested power project in Vietnam. The first one is Phu My 2.2 power plant in southern Ba Ria-Vung Tau province, which was jointly built by Sumitomo, Japan’s TEPCO Company and French EDF Energy.