Vietnam cancels land lease for Malaysia-invested $3.2 bln thermal power project

Authorities in the Mekong Delta city of Can Tho have moved to terminate the land lease for the long-delayed $3.2 billion Song Hau 2 thermal power plant led by Malaysia’s Toyo Ink Group Berhad, marking the latest step toward ending the project.

Nguyen Van Hoa, Vice Chairman of the Can Tho People’s Committee, has signed a decision establishing a task force to oversee the termination of the land lease agreement for the coal-fired project.

The decision follows a July 2024 decision from the Ministry of Industry and Trade (MoIT) to revoke the build-operate-transfer (BOT) contract signed in December 2020 between Toyo Ink Group Berhad — a subsidiary of Toyo Ventures Holdings Berhad — and its local partner, Song Hau 2 Power Co. Ltd.

The Song Hau 2 project, fully owned by Toyo Ink Group Berhad, was once envisioned as one of the Mekong Delta’s largest power plants, supplying 2,120 megawatts to the regional grid.

But nearly four years after the BOT agreement, the project has made no construction progress due to prolonged land clearance and financing hurdles.

In its January 2024 annual report, Toyo Ventures chairman Tuan Haji Ir. Yusoff Bin Daud said the company was seeking financing backed by EXIM Bank Malaysia and had received technical support from China Energy Investment Corp.

Covering 117 hectares with a registered investment of VND74 trillion ($3.2 billion), the project was initially slated to begin operations in 2021-2022. However, it remains idle, with only partial site clearance achieved.

Toyo Ink has so far paid about VND560 billion ($21 million) in compensation to local authorities for affected households. But delays in disbursement and remaining payment shortfalls have left the site unresolved.

Local officials said the termination is a necessary step to reclaim the land and attract new investors with the financial and technical capacity to utilize the existing Song Hau power center infrastructure more effectively.

Can Tho in southern Vietnam is considered the "heart" of the Mekong Delta. State-owned Petrovietnam plans to develop an eco-energy and industrial center project in Can Tho, one of the six centrally-governed cities in Vietnam, together with Hanoi, Hai Phong, Danang, Hue, and Ho Chi Minh City.