Tata enthusiasm sparked by Soc Trang power offer

India’s Tata Power is keen to sign build, operate and transfer deals in the power sector

The Indian power company is negotiating a build, operate and transfer (BOT) contract with the Ministry of Industry and Trade (MoIT) for a $2 billion investment project into Long Phu 2 coal-fired power plant in the province.

While discussions continue, the Soc Trang Provincial People’s Committee confirmed that Tata Power had also recently expressed interest in the nearby Long Phu 3 power plant.

Tata Power is also interested in the potential of wind power in the province. The move shows Tata Power’s desire to further penetrate into Vietnam’s attractive power generation market.

Long Phu 2 is Tata’s first dip into Vietnam’s power industry after receiving the Vietnamese government’s approval to conduct feasibility studies for the project last year. In a meeting with the Ministry of Planning and Investment last month, a Tata Power representative in Vietnam said the company was closer to the completion of negotiations with the MoIT on the BOT contract and it would start operating the plant in 2020.

According to the MoIT, Vietnam needs to add more 36,000 megawatts generated from thermal power plants by 2020 to ensure the national power security. The growing demand for power has encouraged increasing numbers of foreign companies to invest in Vietnam.

Posco Energy last year signed a memorandum of understanding with the northern province of Quang Ninh for studying feasibility of a 1,200MW thermal power plant in the province. This project would cost about $2 billion, under a BOT model. If Posco Energy invested into this project, this would be the company’s third power plants in Vietnam, following the one in the northern province of Ninh Binh, and the other also in Quang Ninh.

While Posco Energy is interested in the project in Quang Ninh, South Korea’s Keangnam Enterprise – in association with Vietnam’s Hanoinco – have proposed an investment plan for building the Van Phong 2 thermal power plant in the central province of Khanh Hoa’s Van Phong Bay. The 1,300MW plant is expected to be operational by 2020.

South Korea’s Lotte Group also expressed interest in conducting a feasibility study of a power project the central province of Nghe An’s Quynh Lap thermal power centre.

During the last 15 years, only five power projects have been granted to foreign investors under the BOT model in Vietnam, including Phu My 3, Phu My 2.2, Mong Duong 2 and Hai Duong.