Contractors extend construction start of $3 bln coal-fired power plant in southern Vietnam to Jun 30

The issuance of a Note to Proceed (NTP) for the long-delayed coal-fired Song Hau 2 thermal power plant has been extended to June 30, said Malaysia-based Sunway Construction Group Berhad, a partner in the contractor consortium of the $3-billion project.

Vietnam’s Power Engineering Consulting JSC 2 (PECC2) and Sunway established the Sunway-PECC2 consortium as the engineering, procurement and construction (EPC) contractor for the project in December 2022, the Malaysia firm clarified in a Monday filing sent to the Bursa Malaysia stock exchange.

The NTP could be reset again if “the parties mutually agree upon in writing,” Sunway noted. Work on the project, including design, engineering, procurement, manufacture, supply, construction, erection, testing and commissioning, have yet to commence pending the issuance of the NTP, Sunway stressed.

The update is part of an amendment to the contract signed between the project contractor and the owner in March 2023, according to the filing. Malaysia-based Toyo Ink Group Berhad and its Vietnamese subsidiary Song Hau 2 Power Company Ltd. are the investors of the 2,100-MW project, located in Vietnam’s Mekong Delta province of Hau Giang, Sunway added.

June 30 is also the extended deadline for the financial arrangement recovery period of the project, said Toyo Ventures Holdings Berhad, the parent firm of Toyo Ink Group Berhad, in an announcement released in April.

“Financial Close of the project is maintained by June 2024, where all the lenders are currently processing the financing documents led by the exclusive Mandated Lead Arranger,” Toyo Ventures Holdings said.

Hau Giang province and the Malaysian investor signed an agreement for the 2,120 MW project under the build-operate-transfer (BOT) format in December 2015. The project missed the initial deadline for completion in Q2/2022, partly due to the investor’s inability to meet its capital obligations.

The power plant is one of five coal-fired power projects prioritized in the national Power Development Plan VIII (PDP VIII). However, as all five projects – Cong Thanh, Nam Dinh 2, Quang Tri, Vinh Tan 3, and Song Hau 2 – are facing capital arrangement problems, the Ministry of Industry and Trade has extended their deployment deadlines to June 2024, failing which they could be terminated.