Red tape thwarts energy investors
Red tape thwarts energy investors
More and more foreign investors are keen to enter the power sector, but licensing remains tardy due to challenges related to build-operate-transfer contracts, selling prices, and foreign currency guarantees.
The people's committee of the northern province of Quang Ninh recently signed a memorandum of understanding with South Korea's Posco Energy for a 1,200MW electricity plant at an estimated cost of US$2 billion.
"Local authorities will closely co-operate with investors to study, investigate, and choose the best site for the plant as well as provide the best support for the investor to implement the project," Nguyen Van Thanh, deputy chairman of the People's Committee, was quoted as saying by Dau Tu (Viet Nam Investment Review) newspaper.
In mid-September the province had signed another MOU with US company AES for another 1,200MW thermal power plant, and earlier with Hong Kong – based Texhong for the 2,000MW, $2 billion Hai Ha Thermal Plant.
Foreign investors are not only eyeing plants in Quang Ninh but also elsewhere in the country.
Last month the joint venture between South Korea's Keangnam Enterprise Ltd and Ha Noi Construction – Industry – Investment began talks with the central province of Khanh Hoa for the Van Phong 2 coal plant. Construction is expected to begin in 2017 and the plant will go on stream three years later.
South Korea's Samsung C&T has signed an MOU with the Ministry of Industry and Trade's Energy General Department to build the Vung Ang 3 Thermal Plant in the central province of Ha Tinh.
The 1,200MW the plant is expected to begin operating by 2022.
The neighbouring province of Nghe An has received inquiries from South Korea's Lotte Viet Nam Technology – Construction company for the proposed 2,400MW Quynh Lap 2 Thermal Plant.
There are proposed foreign projects like the $2.26 billion Quang Tri Thermal Plant by Thailand-based EGATI, Song Hau 2 Thermal Plant by Malaysia's Toyo-Ink, the $2.3 billion Nghi Son 2 by Japan's Marubeni and South Korea's KEPCO, and $2 billion Van Phong 1 Thermal project by Japan's Sumitomo.
Clearly foreign investors find the Vietnamese power sector attractive and are ready to invest in build-operate-transfer plants, but not many have been approved yet.
Only Mong Duong II and Hai Duong Thermal are underway with construction having started, while the rest are awaiting licences as investors and authorities thrash out issues related to BOT contracts, electricity selling prices, and foreign currency guarantees.
Investors have complained many times about the long time it takes to review a project and issue a licence.
"The time taken for negotiating and preparing for a project in Viet Nam is from three to five years," one foreign investor said.
But several projects have taken even longer.
For instance, the formal proposal for Van Phong 1 was made in 2006, and investor Sumitomo has been saying repeatedly that it wants to speed up the project and start construction by the end of 2015. The Japanese company had hoped to sign a BOT contract in the first quarter of this year and get the licence by July, but nothing has happened yet.
The fate of the $3.5 billion Song Hau 2 thermal project has been similar: Malaysia's Toyo Ink had hoped to sign a BOT contract with the ministry of Industry and Trade in August 2013, and is still waiting.
Meanwhile, deputy chairman of Quang Tri Province, Nguyen Duc Chinh, has urged EGATI to speed up preparations for the Quang Tri Thermal Plant to get the licence by 2016, start construction by 2018, and begin operating by 2021.
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