Japanese-Korean team in $620m Vietnamese power deal

Japan’s Mitsubishi Corporation and partners have signed a contract with state-owned power utility Vietnam Electricity to build an additional 600MW coal-fired power plant in Vinh Tan, Southern Vietnam, on top of a 1.2GW contract they won in 2013. 

Mitsubishi will again team with Doosan Heavy Industries & Construction of Korea, a subsidiary of Vietnam Electricity and Vietnamese firm Pacific Corporation to develop the extension to the Vinh Tan IV power project, the companies said in a statement today. 

When the EPC contract was awarded in January, Doosan said the 600MW expansion was valued at around $560 million. However, the latest estimates show the project would cost around $620 million, according to reports. 

The same group has been working on constructing two 600MW coal-fired thermal power plants at the same site since sealing the contract with Vietnam Electricity in 2013. 

Financial close was reached in October 2014, according to data from sister website IIAssets. Total project value for the 1.2GW plant was $1.36 billion, of which 85 percent came in the form of credit loans from Export-Import Bank of Korea, Korea Trade Insurance Corporation and Japan Bank for International Cooperation, as well as remaining 15 percent from fund investors.

Construction of the first unit is expected to be completed by 2017, with the second one to follow in the next year. 

The new plant will be constructed adjacent to the other two plants. It is scheduled for completion in November 2019. Mitsubishi will supply steam turbine and generator, while Doosan will be in charge of boiler supply and site construction. Vietnamese partners will be responsible for ancillary equipment. 

Upon project completion, the station, which is wholly owned by Vietnam Electricity, will have a total power output capacity of 1.8GW. 

Electricity demand in Vietnam is expected to see an increase of more than 10 percent per year as the country’s annual GDP grows at a rate of six to seven percent. Cities, particularly those in Southern Vietnam, are suffering from a shortage of power supply while the demand for electricity is increasing due to urbanisation and industrialisation. Vietnam’s power market is expected to hit 30GW by 2020. 

Earlier in January, a consortium comprising Saudi Aradia’s ACWA Power and South Korea’s Taekwang Power agreed to invest more than $2.2 billion in the 1.2GW Nam Dinh 1 Thermal Power Plant Project, under a 25-year BOT contract.