Tata Power Bags $1.8 Billion Project as Indian Investment in Vietnam Grows

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Tata Power (BSE:500400) (Mumbai, India) won a $1.8 billion contract to build two 660-megawatt (MW), coal-fired power plants in southern Vietnam. It is said to be the largest Indian investment in Vietnam to date.

India has been seeking closer ties with the Association of Southeast Asian Nations (ASEAN), and the Long Phu 2 project is a positive indicator of Tata's ambitions to expand in the region. It also is a positive sign for India's "Look East" strategy.

Tata was awarded the project contract by the Vietnamese government on the basis of pre-feasibility studies, and a memorandum of understanding (MoU) is now being put in place. Financial closure and a power purchase agreement (PPA) will follow. Construction of the plant is expected to start in 2019. Tata Power won the contract after competing with South Korean and Russian companies.

Long Phu 2 will be one of three plants at the Long Phu thermo-electricity center planned by the Vietnamese government to be developed through 2025. The first plant at the site, Long Phu 1, is under construction by state-owned PetroVietnam and is scheduled to start commercial operations in 2015.

At the end of 2011, India had 62 investment projects in Vietnam with a total registered capital of $234 million. Indian investments are being made in a range of sectors, including oil and gas exploration, mineral exploration and processing, sugar manufacturing, agro-chemicals, information technology, and agricultural processing.

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