Sao Mai Group's solar power projects face hurdles

Multi-sector firm Sao Mai Group identifies energy as a key investment segment in its development strategy, but a series of its renewable energy projects have encountered multiple difficulties.

With the 2017 establishment of Sao Mai Solar Co., Ltd., which specializes in installing solar power systems, with charter capital of VND20 billion ($815,000), Sao Mai Group, listed on the Ho Chi Minh Stock Exchange (HoSE) as ASM, marked the start of its participation in the renewable energy segment.

Its stand-out project in this field is the 210-megawatt-peak An Hao Solar Power Plant with a total investment of VND6 trillion ($244.5 million) and an area of 275 hectares. The project started in 2017 and was completed before December 31, 2020, and is eligible to enjoy the government’s preferential feed-in-tariffs (FiTs).

The 20-year preferential FiTs are 9.35 U.S. cents per kWh (Decision 11/2017) and 7.09-8.38 U.S. cents per kWh (Decision 13/2020) for solar power projects that became operational by December 31, 2020; and 8.35-9.8 U.S. cents per kWh (Decision 39/2018) for wind power projects that became operational by November 1, 2021.

Sao Mai also operates the 210 Mwp An Hao and 50 Mwp Long An solar power plants. Its electricity sales revenue increased gradually from VND227 billion ($2.95 million) in 2019 to VND609 billion ($24.82 million) in 2022. The contribution of the renewable energy segment to the company’s total gross profit has reached up to 31% in recent years.

In 2019, Sao Mai completed a controlling investment in the Europlast Long An solar power plant in the Mekong Delta province of Long An. The VND1.16 trillion ($47.3 million) project has a capacity of 50 MW, and enjoys a preferential price of 9.35 U.S cents per kWh. Also that year, the group began recording revenue and profit from the renewable energy segment.

However, the Government Inspectorate concluded that Europlast Long An Solar Power JSC (Europlast Long An), an arm of Sao Mai Solar Co., Ltd., started construction on the project without a land lease from the provincial People's Committee. This is strictly prohibited under the 2013 Land Law.

According to the inspectors, during the project's investment process, the investor fixed these violations. However, its violations impacted construction progress to reach the commercial operation date before the timelines of July 1, 2019 and January 1, 2021 to enjoy the FiTs for 20 years.

The 50 MW Europlast Long An solar power plant covers an area of 58.6 hectares in My Thanh Bac commune, Duc Hue district. With construction commencing in September 2018, it was put into operation in May 2019.

After the plant came into operation, on June 28, 2019, 23 million shares in Europlast Long An (equivalent to 76.67% of charter capital) were transferred to Sao Mai Group. The transfer value of the deal at that time was not disclosed.

Europlast Long An is headquartered in My Thanh Bac commune, Duc Hue district, with Le Thi Nguyet Thu as the legal representative. Thu also represents Sao Mai Solar and Nhut Hong JSC.

Recently, the chairman of the People's Committee of Hau Giang agreed to cancel a policy that allowed Sao Mai Group to research and prepare an investment proposal for a wind and solar power complex in Long My district. The reason for the cancellation was not revealed by the committee.

In a draft plan for implementing the National Power Development Plan for the 2011-2030 period with a vision to 2050 (PDP VIII), in 2021-2030, Hau Giang province will generate a rooftop solar power capacity of 28 MW.

According to its latest decision, the provincial People’s Committee has abolished investment policies for six solar power projects, including four in Phung Hiep district, one in Long My district, and one in Vi Thanh town.

Closing the Wednesday session, ASM stood at VND10,500 ($0.43)