POWER March 2012 - 58

POWER IN VIETNAM
The Coal Conundrum
Vietnam's ambitious plans to increase
power capacity are marked by a proposed
rapid build-out of thermal power plants: By
2020, total coal power capacity is expected
to surge to 36,000 MW (or about 50% of
total power production), consuming 67.3
million metric tons of coal. A further expansion
of coal capacity is expected by
2030 to about 75,000 MW (52.3% of total
power production), requiring 171 million
metric tons of coal. The government has
already reportedly earmarked $83 billion
to build 90 new coal power plants with
a combined capacity of 106,000 MW by
2025, which could boost coal demand beyond
100 million metric tons. However,
due to the country's artificially capped
power prices, it continues to have difficulty
attracting foreign investment to fund
power infrastructure improvements.
Nevertheless, billions of dollars of contracts
have been awarded over the past
three years for new thermal plants. Among
numerous notable projects is a $1.5 billion
long-term construction contract awarded
by Vietnamese state-owned PetroVietnam
to its subsidiary Petrovietnam Technical
Services Corp. for the development of the
1,200-MW Song Hua 1 coal power plant in
Hau Giang. AES Corp. recently closed on
another $1.5 billion long-term contract for
the 1,200-MW Mong Duong II coal plant
in Quang Ninh province-a build-operatetransfer
(BOT) joint venture between AES
Corp. and Vietnam Coal and Mineral Corp.
And Malaysia-based JAKS Resources
Berhad Group broke ground in September
2011 for construction of the $2.25 billion
1,200-MW Hai Duong thermal plant in the
northern province of Hai Duong. These
plants could be operational by the second
quarter of 2017.
But even this massive addition in new
capacity is not guaranteed to alleviate
shortages, the government acknowledges.
The Ministry of Industry and Trade admitted
in an August 2011 report following up
on progress made on the sixth Master Plan
that of 42 power plants, including hydropower
and coal facilities, scheduled to go
online between 2010 and 2012, 28 were
going to be late by one or two years. Those
plants include EVN projects Quang Ninh 1
and Hai Phong 1 (Figure 5)-both delayed
by more than 27 months. The same report
suggests that eight power plants with a total
capacity of 3,410 MW, which should
have begun generating power in 2010 or
2011, won't be operational until at least
this year. Meanwhile, a government update
at the end of 2011 showed that of 33 power
plants under construction, only 11 were on
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POWER | March 2012
schedule. Factors causing delays ranged
from " unprejudiced or subjective reasons, "
to " carelessness in the implementation,
management or supervision, " the government
says.
Vietnam Energy Association Chair Tran
Viet Nghia, who last September pointed
out that many of the projects that were delayed
were being carried out by Chinese
contractors, urged the government to limit
those contractors' participation in future
projects. Besides lacking better technology
and equipment, Chinese construction
standards weren't high enough, and Chinese
projects used only Chinese personnel,
he said. Nghia suggested that existing bidding
laws be changed because they barred
investors from choosing vendors from the
U.S. and European Union.
From Coal Exporter to Importer
Perhaps the most prominent challenge is
that, with massive new coal facilities, Vietnam-a
country that in 2008 produced 40
million metric tons (mt) of coal a year and
exported nearly 80% of it-will see swelling
domestic demand for coal but cannot
guarantee its future fuel supply. To meet
this demand, which is set to increase from
42 million mt in 2010 to 171 million mt by
2030, experts project that the country will
cease exporting coal altogether as soon as
2025 and begin competing for imported
coal with energy-hungry coal power users
like China and India.
In 2012, according to state-owned coal
producer Vinacomin, the country plans to
slash exports by 18.2% from 2011 numbers,
to 13.5 million mt, and then cut
exports to 8 million mt in 2013 and 4.5
million mt in 2015 to save supplies for domestic
consumption. Additionally, in June
last year, on what Vinacomin called a " trial
basis " -that is, without an official import
plan-the country imported its first thermal
coal shipment from Indonesia. Import
coal volumes are expected to reach 28 million
mt by 2015.
Vietnam supposedly has vast coal resources,
but its proven reserves (in the
northern Quang Ninh province, the country's
main coal mining and processing
zone) are only 150 million mt. Over 30
billion mt have been said to be located in
the northern Red River basin, but these are
largely untapped not only because the region
is the country's largest rice-growing
area after the Mekong Delta but also because
Vietnam doesn't have the capital to
develop new mines. Experts also point out
that Vietnam's coal is primarily anthracite-which
as of Jan. 1, 2012, cost $230/
5. Delays and doldrums. When construction on the 1,200-MW two-unit Hai Phong coalfired
power plant in Thuy Nguyên, Hai Phong, began in November 2005 by China's Dongfang
Electric Corp. and Japan's Marubeni Corp., the project was hailed as one of the largest thermal
power plants in the nation, and the largest contract between China and Vietnam at the time.
Overshooting their completion deadline by more than 27 months, the first two 300-MW units
of Hai Phong 1 were expected to join the national grid in mid-2011-a milestone POWER could
not confirm-and the second two units, part of Hai Phong 2, are scheduled to start operations
in April 2013 and September 2013. Courtesy: Panaromio

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POWER March 2012

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