VietNamNet Bridge – Three cooperation agreements on the development of big scale thermo power plants in the central and southern regions have been signed in the last half a month, which can show the big interests of investors in thermopower projects.

Just after several days after the decision to increase the electricity price by five percent was announced in late 2011, three cooperation agreements on developing thermo power plants were inked. This shows that investors prove to be very clear headed to any changes in the electricity pricing mechanism.

Most recently, Prime Minister Nguyen Tan Dung affirmed at a conference of the Ministry of Industry and Trade that the electricity pricing would follow the market rules, and that the sale electricity price must not be lower than the reasonable production costs.

Two of the three cooperation agreements on developing power projects belong to one foreign investor – PHI Group. Though not much information can be found at www.phiglobal.com about the investor, and even state owned enterprises which have experiences in developing power sources in Vietnam also do not know much about the name, the two agreements signed by PHI Group both have big scale.

These include a 2400-3600 MW thermopower plant which is expected to be located in Hai Lang in Quang Tri province. The project would be carried out with the cooperation with the Vietnamese partner Saonam Group. The other thermo power plant – 2000 MA – would be developed with the cooperation of Hoang Ngoc Company in An Giang province.

The third project is developed by Singaporean Sembcorp Group. A 1200 MW thermo power plant would be located in the Dung Quat Economic Zone, while the plan to develop another VISP industrial zone in the zone has also taken shape.

Sembcorp has been known as the investor who has capital contribution to the VISP industrial zone chain in many localities of Vietnam, and now holds 33.3 percent of stakes at the Phu My 3 thermo power plant in Ba Ria-Vung Tau – a 749 MW plant which has been operational since 2004.

Prior to that, in 2011, investors from Thailand also announced the plan to build a thermo power plant with the capacity of 700MW in Nhon Hoi economic zone in Binh Dinh province with the investment capital of 850 million dollars.

Dang Hoang An, Deputy General Director of the Electricity of Vietnam EVN, said that Vietnam welcomes all the investors in the power sector, because this will help ease the pressure on the investment capital arrangement.

The latest overall plan to develop power generation sources in 2011-2020 with the vision until 2030 also says that Vietnam encourages all the capital resources into the power sector. The State has promised to create most favourable conditions for investors to develop the projects which do not use the state budget. The investors will have the right to make investment and sell electricity in accordance with the current laws.

Big difficulties existing

In an effort to speed up some foreign invested projects, in September 2011, the government released a notice, allowing to apply some flexible regulations in the negotiations for power projects. This allows power project investors to shorten the negotiation duration.

However, in reality, in order to turn the agreements on power source development into realistic, investors still have to overcome many other difficulties

An official of the Ministry of Industry and Trade said that the above said projects have not been named in the list of the power projects in the latest power generation development plan. Therefore, in order to implement the projects, investors would still need to obtain the permission from relevant agencies.

With the high investment rate of 1.2-1.5 billion dollars for 1000 MW of capacity, it would be very difficult for investors to arrange capital themselves.

Source: TBKTVN