South Korea’s Teakwang Power Holdings last week moved towards developing its thermal power project in northern Vietnam.
The project principles reached with local authorities will be the framework for investors and Vietnamese authorities to negotiate specific deals regarding land, coal, water and power prices for the 2,400 megawatt Nam Dinh coal-fired power plant in Nam Dinh province’s Hai Hau district.
Taekwang Power Holdings in late March, 2010 signed a memorandum of understanding with Vietnam’s Ministry of Industry and Trade (MoIT) to develop the project. Under which the Korean firm would join hands with local firm Hoang Anh Shipbuilding Industry JSC (Hashinco) to build the $4.5 billion plant.
The two partners already set up a joint venture, in which Taekwang contributed 95 per cent of the project’s total investment capital and Hashinco made the remainder.
The plant is projected to be divided into two phases and be built under the form of build-operate-transfer (BOT) on 251 hectares and the Korean firm will operate the plant within 25 years.
A part of the principles was the Vietnamese authorities’ promise to ensure local coal supply for the first phase of the project.
The investor will possibly have to source overseas coal for the project’s second phase because of the Vietnamese supply’s shortage in the next several years.
“Although the Vietnamese authorities face difficulties in coal supply, we are still allowed to utilise domestic coal during the first phase,” said Kim Ki Jae, president of Teakwang Power Holdings.
“The framed principles will allow us to reach specific deals with Nam Dinh’s authorities on related issues. I hope the support from the government, Nam Dinh province and local people will enable us to develop the project under the time line,” Kim said.
Construction of the first two power generation groups with an accumulative capacity of 1,200MW is scheduled to be completed in late 2016. Development of the remaining two generation groups in the second phase will be finished in 2021.
Last week, Teakwang Power Holdings signed a joint agreement with the state-run Vietnam Coal and Mineral Industries Group (Vinacomin) to extract coal from Bao Dai mine in northern Quang Ninh province.
In mid November 2010, Teakwang Power Holdings’ general director Lee Seung Won arrived in Nam Dinh to promote collaboration with local authorities in site clearance and compensation to enable the project to start construction as scheduled.
Nam Dinh People’s Committee chairman Nguyen Van Tuan said the province would make efforts to provide clear land for the Korean investor in mid 2011 and also asked for the investor’s progressive support to speed-up compensation progress.
There have been no land reclaimation activities so far as local authorities are still waiting for a payment upfront for land from the Korean investor, which would be then covered from future taxes.