Three billion-dollar thermal power plants running behind schedule
Three billion-dollar thermal power plants running behind schedule
Failure to discuss between investors and contractors as well as the weakness in management and inadequate operation capacity of contractors are two of the major reasons delaying the construction of three billion-dollar thermal power plants.
The three projects include $1.82 billion Duyen Hai 3 expanded, $2 billion Song Hau 1, and $1.2 billion Long Phu 1 thermal power plants.
The Duyen Hai 3 thermal power plant expansion project
The project at Duyen Hai thermal power complex located in Dan Thanh commune, Duyen Hai district includes a 688MW power facility. The facility was scheduled to start operation in 2018, supplying approximately 3.9 billion kWh to southern region.
In 2014, Sumitomo Corporation received an engineering, procurement, and construction (EPC) contract to construct a supercritical power station in the 688MW Duyen Hai 3 coal-fired thermal power station expansion project of Power Generation Corporation 1, a power subsidiary of state-run utility Electricity of Vietnam (EVN).
Duyen Hai 3 is one of four power projects developed at Duyen Hai Power Centre with a combined generation capacity of 4,348MW as outlined in the nation’s power development master plan between 2011 and 2020 with vision towards 2030. The centre occupies a total area of 879 hectares.
According to the report of the National Steering Committee for Power Development, the construction of Duyen Hai 3 expanded project is 6.5 months behind schedule.
Sumitomo Corporation and sub-contractors’ weakness in management and operation capacity, in collaboration with the delays in supplying machineries and equipment, are major reasons for falling behind schedule.
Especially, the fire at the construction site in March, caused by the carelessness of the sub-contractor Jurong Engineering Limited, will extend the delays in the construction of the project.
Song Hau 1 thermal power plant
Song Hau 1 thermal power plant is one of the key projects in the National Power Development Master Plan VII. It is invested by Petrovietnam and managed by PetroVietnam Song Hau 1 Power Project Management Board and developed by general contractor Lilama Corporation through the EPC format.
This project is part of the 5200MW Song Hau Thermal Power Centre (including three member thermal power plants), located in Chau Thanh district, Hau Giang province with a $2 billion total investment.
The construction of the project was started in May 2015. According to plan, the plant would come into operation with full capacity in 2019 and generate 7.8 billion kWh of power per year.
However, as of April 2018, the construction progress only met 56.57 per cent of the schedule, meaning a 24 month delay.
According tothe EPC contract, 12 months after the signing (April 10, 2016), the project’s management board and the general contractor will be permitted to discuss adjustments to the prices for a number of component construction projects.
However, the documents of competent state management agencies do not provide detailed guidance on the method of adjustment, thus, parties have yet to reach a compromise ever since.
Besides, according to the EPC contract that PetroVietnam and Vinaincon E&C signed on May 15, 2017, Vinaincon E&C will conduct the construction of the 500kV distribution yard segment within 602 days, however, the segment is still being evaluated and has not even started construction.
Furthermore the delay in construction caused the investment capital of the project to increase by VND10.45 trillion ($458.04 million) due increases in the price of machinery, equipment, and labour, among others.
Long Phu 1 thermal power plant
On January 26, Power Machines, the EPC contractor of Long Phu 1 thermal power plant, was put on the US Department of Treasury’s extended list of Russian individuals and companies subject to sanctions imposed on Moscow over the Ukraine crisis.
The move may delay the construction of Long Phu 1 project by 36 months. After the sanctions were imposed on Power Machines, General Electric announced cancelling the contract of supplying turbines and generators, which are two important segments of the project.
In September 2015, PetroVietnam and the Power Machinery-PTSC contractor partnership held a ceremony to begin he construction of Long Phu 1 in the Mekong Delta’s Soc Trang province.
The thermal power plant consists of two generators with a capacity of 1,200MW in Long Duc commune, Long Phu district, and is one of the key national projects within the National Power Development Master Plan VII.
The first generator was expected to be put into commercial operation in 2018 and the second in 2019.
