Big power deal to show way forward

News - A Malaysian $1.4 billion power project may see the light of day with a build-operate-transfer agreement soon to be clinched.

Hai Duong People's Committee chairwoman Nguyen Thi Minh revealed that impressive progress had been made with Jaks Resources Bhd in negotiating issues concerning the coal-fired power plant.

"With the negotiation progress so far, we hope to soon reach an agreement. Hence, the granting of investment licence for the project is also coming," Minh said.

In late March 2010, Jaks Resources Bhd completed negotiations for a 25-year power purchasing agreement (PPA) with the State-monopoly power distributor Electricity of Vietnam (EVN) for its 1,200 megawatt project, 50 kilometres from Hanoi.

PPA negotiations with EVN have been considered the biggest hurdle for foreign investors to develop power projects in Vietnam. According to a Ministry of Industry and Trade (MoIT) source, Jaks Resources will sell its power products to EVN at 5.101 UScents per kilowatt hour (kWh), a landmark deal for the project's progress.

Minh said local authorities in Hai Duong had already committed to transfer a 200 hectare site in Kim Mon district for the investor two months after it received an investment certificate.

"We are in the final stages to complete land compensation for this area," Minh said. Jaks Resources planned to start the plant's construction in the last quarter of this year and the commercial operation for the first 600MW unit in the fourth quarter of 2014. The second 600MW unit will be then operate in the second quarter of 2015.

The Malaysian investor had already concluded negotiations with China Huadian Engineering Company, a unit of China Huadian Corporation, for the engineering, procurement and construction (EPC) contract for the project.

The plant will fire domestic coal supplied by Vinacomin from nearby coal mines in Quang Ninh province. The coal supply arrangement will be also specified in a 25-year coal supply agreement with Vinacomin.

Jaks has been pursuing investment opportunities in the power sector in Vietnam since 2005. It won the Vietnamese government approval to invest in the power plant two years ago, which is listed in Vietnam's power development strategy until 2015, with a vision to 2025.