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Song Hau 2 will help Vietnam ease power shortages
The document stipulates that the company plans to break ground on the 2,000 megawatt Song Hau 2 coal-fired power plant under its build-operate-transfer (BOT) agreement after receiving the Vietnamese government approval in March.
The MOU divides the plant development into two phases. The first will be the capacity of 1,000 megawatts by 2021, and 2,000 megawatts in the second phase by 2022.
The plant is part of the 5,200 megawatt Song Hau Power Centre in Hau Giang Industrial Park, which will include three power plants, including the 600 megawatt Song Hau 1 by the state-run Vietnam National Oil and Gas Group (PetroVietnam).
Toyo Ink’s managing director Steven KC Song shared with VIR that the $3.5 billion project was aimed at making up Vietnam’s current electricity shortages.
With electricity consumption rising at 12 per cent a year, the nation’s current power plant projects are not keeping pace with demand peaks.
The dry season is, above all, a major problem due to Vietnam’s dependence on hydro-power plants which make up 40 per cent of the nation’s generation capacity.
“After seven years of research and preparation, we are confident that the project will be completed on time to a high standard,” said Steven.
Steven also explained that Toyo Ink submitted a feasibility study to the Ministry of Industry and Trade (MoIT) and worked with banks to secure capital and coal suppliers.
The MoIT has ensured it would sign the BOT contract with the Malaysian firm as soon as the investor finalises their coal and power trading deals with partners.
Toyo Ink’s Vietnam representative office head Nguyen Hung Viet said “This MOU is a milestone for us in our coal and capital negotiations. We expect the BOT contract to be signed next year.” He also said that the Song Hau 2 plant would import coal from Indonesia or Australia.
Industry experts have noted that a potential issue would be the negotiation of the power price with the state-run Electricity of Vietnam (EVN), the country’s sole power buyer and that this may lengthen the current project timetable.
However, Viet asserted that this was not the first BOT power plant in Vietnam, and previous experiences may have paved the way for a more clear-cut compromise.
Although the Vietnamese government has prioritised foreign investments into the power sector, at present there are only four foreign-backed BOT power plants in Vietnam – Phu My 2.2, Phu My 3, Mong Duong 2, and Hai Duong thermal power plants.
Toyo Ink is a holding and management services company. Its core businesses are manufacturing solvent and water-based inks and varnishes used in the packaging industry.