State-run Vietnam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin) and Electricity of Vietnam (EVN) protested against Geleximco’s proposal to co-operate with Chinese partners to develop billion-dollar thermal power plants.

Quang Trach 2 thermal power plant

The Ministry of Industry and Trade (MoIT) has issued a document to collect opinions from authorities about the proposal of Hanoi General Export Import JSC (Gelexim) to establish Geleximco-HUI, a joint venture between Geleximco and Hong Kong United Co., Ltd. (HUI), to hand over the $2 billion thermal power plants namely Quynh Lap 1 and Quang Trach 2 from Vinacomin and EVN, respectively.

The two projects will be developed under the public-private partnership (PPP) form.

Notably, Geleximco proposed permitting the joint venture to hold a 75 per cent stake in Quynh Lap 1, leaving the remaining 25 per cent with the existing investor. Meanwhile, the joint venture is looking to acquire the entire 100 per cent stake of Quang Trach 2 from EVN.

The two projects' total investment capital is in the billion-dollar range, however, Gelexim stated that 80 per cent of the investment capital comes from loans from Chinese banks, while equity is just 20 per cent.

Geleximco affirmed that the joint venture can arrange capital without guarantee from the government and it can start the construction as it has yet to collect enough capital.

Vinacomin disagreed with Geleximco's proposal to hold a 75 per cent stake in the joint venture.

Vinacomin added that in May 2017, it signed a memorandum of understanding with Geleximco-KAIDI and KOSPO from South Korea to co-operate to devlop Quynh Lap 1 project.

According to the arrangement, Vinacomin will hold at least 36 per cent, while KAIDI and KOSPO will hold the rest. However, during the negotiation process, Geleximco and KAIDI affirmed that they will hold 34 per cent each and will not co-operate with any other investors. As a result, the parties suspended the negotiations due to failing to reach a compromise.

Regarding EVN, which was assigned to develop the Quang Trach 2 project, EVN stated that there are no regulations permitting the investor to invest in power projects under the PPP model. Besides, it will take Geleximco and its partner a long time to complete the establishment of the joint venture, which may cause long delays in project development.

EVN said it can arrange capital in terms of loans from Vietcombank and VietinBank.

In October 2016, the prime minister assigned EVN to replace Russian Inter RAO Group to carry out a pre-feasibility study to develop Quang Trach 2 project.

In January 2015, Inter RAO and the Quang Binh People’s Committee signed a memorandum of understand (MoU), greenlighting the development.

Accordingly, the project, which will be developed under the build-operate-transfer (BOT) scheme, will have total investment capital of $2.4 billion and a total capacity of 2,400MW. It is slated to become operational in 2024 at the latest.

However, as of October 2016, the Russian firm had yet to complete the pre-feasibility.

Quynh Lap 1 thermal power plant is one of the two projects in the Quynh Lap Power Centre in Quynh Luu district. At the end of April 2009 the prime minister issued Document No.2798/VPCP-KTN permitting Vinacomin to become the plant’s developer.

In July 2015, Vinacomin and the Nghe An People’s Committee signed an agreement over the construction of the project. With an investment of $1.8 billion, the plant is expected to have an annual capacity of 1,200MW once completed.

VIR