PetroVietnam Technical Services Corporation Secures EPC Contract for Long Phu-I Power Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--State-controlled Vietnam Oil and Gas Group (PetroVietnam) (Hanoi, Vietnam) has awarded the engineering, procurement and construction (EPC) contract for the $1.2 billion Long Phu-I thermal power plant to PetroVietnam Technical Services Corporation (HST:PVS) (Ho Chi Minh City, Vietnam). The proposed 1,200-megawatt (MW) power project will consist of two power generating turbines and is the first of three coal-fired power plants proposed to be set up at the Long Phu Electricity Center in the Mekong Delta province. The first turbine is likely to be ready for electricity production in 2014, followed by the second turbine in 2015. The power plant is estimated to produce 7.8 billion kilowatt-hours of power and will be connected the national grid.

About 30% of the funding for the Long Phu-I power plant has been secured from PetroVietnam's investment fund. The remainder will be sourced through loans. Sources have indicated that acquisition procedures for the 115 hectares of land required for the project have been completed.

The first turbine of the Nhon Trach-2 power plant commenced operations about three months ahead of schedule. The 500-MW, $706 million power project, located at Dong Nai province, was jointly developed by PetroVietnam, PetroVietnam Construction JSC (HST:PVX) (Hanoi, Vietnam) and Vietnam Machinery Erection Corporation (LILAMA) (Hanoi, Vietnam). The second turbine will begin operating in 2011.

Vietnam, which has an installed power-generating capacity of about 20,900 MW, is exploring the possibility of developing new power projects to meet the growing demand. The country is also seeking investments from private and international companies to expand its power infrastructure. In a related development, Wuhan Kaidi Electric Power Company (SHE:000939) (Wuhan, China) has signed a memorandum of understanding with Thang Long Thermoelectric JSC (Hanoi, Vietnam) to invest $645 million and provide assistance in the construction of a 600-MW power project in the coal-rich Guangninh province in northern Vietnam. The construction is likely to be completed in 45 months.

During 2010-14, Vietnam's real annual gross domestic product (GDP) is forecast to grow at a rate of 6.26%. During this period, the country's population is set to grow to 92 million from 88.4 million. By 2014, Vietnam's per capita power consumption and GDP growth is forecast to increase 53% and 47%, respectively. According to Vietnam's draft development plan, in order to meet the country's growing energy demand through 2015, about 4,100 MW of new power generating capacity will be required every year. As per government reports published in July 2010, there were 29 new power projects in various stages of construction. These power plants, which include nine thermal power plants and 20 hydropower projects, are expected to add 10,029 MW to the nation's electricity generating capacity. The country is also proposing to build two nuclear power plants with individual capacities of 2,000 MW. The first reactor, which will be built with technical assistance from Russia, is expected to begin operations in 2014. By 2020, Vietnam is also aiming to achieve 100% of its rural electrification target. The country's electricity sector is expected to require $40 billion in fresh investments, of which $30 billion will be required for new power projects. Construction of new transmission and distribution infrastructure and the refurbishment of existing networks is estimated to require about $10 billion.

A report released by Electricity of Vietnam (EVN) (Hanoi), the country's largest power producer, reveals that in a base-case scenario, in the next 8 to 9 years, Vietnam will construct 95 new electricity-generating facilities, with a combined capacity of 49,044 MW. Of this, 44 power plants with a combined generating capacity of 24,045 MW will be funded and built by EVN. The remainder will be constructed by independent power producers.

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