Vietnam: BOT powering energy plans

Vietnam: BOT powering energy plans

Good signs for build-operate-transfer power projects arose early this year
as foreign investors have gained the Vietnamese government's growing trust
to undertake construction of projects.

Malaysia-based Toyo Ink Group Bhd, which first received approval to build a
thermal power plant in Vietnam seven years ago, has moved closer to its
objective with the signing of a memorandum of agreement (MoU) for land lease
rights last week.

The deal was signed by the Mekong Delta province of Hau Giang's Department
of Natural Resources and Environment and Toyo Ink. The land lease lays the
groundwork for the eventual signing of a build-operate-transfer (BOT)

contract. The project is invested with $3.5 billion and has a concession
period of 25 years. It plans to use imported coal for fuel.

According to a VIR source, Toyo Ink expects to reach agreement on all
outstanding terms and issues regarding its BOT contract and the eventual
power purchase agreement before August of this year.

The 2,000MW Song Hau 2 coal-fired power plant is part of the 5,200MW Song
Hau Power Centre in Hau Giang Industrial Park. This complex will comprise
three power plants, including the 600MW Song Hau 1 plant, built by state-run
Vietnam National Oil and Gas Group (PetroVietnam).

According to a company spokesperson, the MoU brings together the best
interests of Toyo Ink and Hau Giang. "The local province shall employ
commercially reasonable efforts to accommodate certain changes raised by
international lenders in the land lease agreement, which are standard and
usual for this type of non-recourse financing and are in accordance with the
laws of Vietnam."

Other foreign investors are looking for opportunities within the power
generation industry in Vietnam.

Korea Western Power Co., Ltd. (KOWEPO) signed an MoU with the Quang Tri
People's Committee last week to develop the Quang Tri 2 thermal power plant.


Quang Tri and KOWEPO expect the Quang Tri 2 thermal power project to be
added to the National Power Development Plan.

Also in the central province of Quang Tri, Russia's VietGazprom is planning
to invest in a gas-to-power project, according to Kovtun Andray, head of
Gazprom International's representative office in Vietnam.

The project is expected to be green-lit by Gazprom International after it
completes a survey in March 2017. The project plans to bring gas to the
mainland of Quang Tri from the Bao Vang field, 120 kilometres offshore on
the continental shelf of central Vietnam.

Just two weeks ago, PetroVietnam signed an agreement with the Vietnamese
unit of the US' ExxonMobil to develop the country's biggest gas project for
power generation.

In the initial stage, the gas output would be supplied to a complex that
includes four power stations with combined capacity of about 3,000MW.

Ngo Son Hai, deputy director of Electricity of Vietnam said that the
state-run power company submitted to the government a request to invest in
two of these four gas-to-power projects.

In recent years, power projects have become main drivers for foreign direct
investment growth in Vietnam. Case in point: two large thermal power
projects are scheduled to be licensed in the early part of this year.

Investment certificates are expected to be granted to the $2 billion Nam
Dinh power plant, developed by Saudi Arabia's ACWA Power International and
South Korea's Taekwang Power, and the $2.2 billion Nghi Son thermal power
plant, by Japan's Marubeni Corporation and Korea's Power Company (KEPCO).

The list of foreign-invested BOT power projects in Vietnam will increase as
several foreign companies are currently in negotiations or are conducting
feasibility studies to build power plants nationwide.

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Link to Original Article:
http://www.vir.com.vn/bot-powering-energy-plans.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com