Vietnam government seeks assurances from TKG Taekwang over $2.2 bln power project

The Vietnamese government has asked South Korea's TKG Taekwang to clarify its commitment to moving ahead with the long-delayed Nam Dinh 1 build-operate-transfer (BOT) thermal power project, with a particular focus on financing arrangements, carbon-emission reduction technology and a specific construction timeline.

Standing Deputy Prime Minister Pham Gia Tuc raised the issue during a Wednesday meeting with Sang Young Jin, CEO of TKG Taekwang in Vietnam. TKG Taekwang is a conglomerate with operations spanning footwear, textiles, chemicals, real estate and energy.

At the meeting, Tuc welcomed the group's efforts to accelerate the 2,400-MW project implementation. He said the project is classified as a baseload power source under Vietnam's adjusted Power Development Plan VIII and will play an important role in supplying electricity to the national grid, particularly in northern Vietnam, in the coming years.

Tuc requested that TKG Taekwang clarify several issues, including its determination to continue implementing the project, measures to secure financing, technologies to reduce carbon emissions, and the earliest possible date for construction to begin.

Sang Young Jin said Taekwang had worked to complete all required procedures and had coordinated closely with the Ministry of Industry and Trade (MoIT) to advance the project, with the goal of successfully signing the BOT contract.

The group has completed financing arrangements for the project and is finalizing the remaining procedures in order to begin construction in 2026, he added.

TKG Taekwang also pledged to deploy advanced technologies and continuously improve operations to ensure the plant meets standards on emissions capture, treatment and reduction. The company is also studying investments in renewable energy projects in Vietnam, including wind and solar power.

Project remains on drawing board after 9 years

The Nam Dinh 1 BOT thermal power project received its investment registration certificate from Vietnam's Ministry of Planning and Investment on June 15, 2017. The project was awarded to a consortium comprising South Korea's Taekwang Power and Saudi Arabia's Acwa Power through Nam Dinh First Power Co. Ltd., a Singapore-based project company.

The coal-fired power plant is expected to have a total investment of around $2.2 billion and a generation capacity of approximately 2,400 MW from two turbines. It is being developed under a BOT agreement with the MoIT.

The project is located in Hai Chau and Hai Ninh communes in Nam Dinh province and covers an area of nearly 243 hectares. Construction was initially expected to start in mid-2018. However, despite the issuance of the investment registration certificate, the project has yet to break ground.

Authorities have attributed the prolonged delays to financing difficulties, changes in shareholders and challenges in completing investment procedures.

Nam Dinh provincial authorities have previously proposed that the MoIT negotiate with investors to switch the project from coal to cleaner fuels such as LNG, in line with Vietnam's environmental commitments made at the COP26 climate summit.

Under Vietnam's Power Development Plan VIII, Nam Dinh 1 remains on the list of priority power generation and grid projects. It is also classified among delayed coal-fired power projects facing difficulties related to shareholder restructuring and financing.

The MoIT had previously granted investors an extension until June 2024, warning that the project could face termination under Vietnamese law if implementation failed to progress.