Minister of Industry and Trade Vu Huy Hoang asked General Department of Energy and related agencies to expedite negotiations for the Vung Ang 2 project before October 15, 2012 to enable investors start construction next year. It will become the third foreign-invested build-operate-transfer (BOT) power project in Vietnam over the past decade, following Mong Duong 2 plant invested by AES Corporation, Posco Power and China Investment Corporation, and the Hai Duong power plant invested by Malaysia’s Jaks Resources.

The 1,200 megawatt Vung Ang 2 project is a part of Vung Ang thermoelectricity power centre in central Ha Tinh province, where PetroVietnam is building another 1,200 megawatt power plant known as Vung Ang 1.

The new project is being built by the Vung Ang 2 Thermal Power Joint Stock Company (VAPCO), a joint venture between the local firm Refrigeration Electrical Engineering Corporation (REE) and OneEnergy Asia Limited, which is a 50/50 partnership of Hong Kong’s CLP Holdings and Japan’s Mitsubishi Group. VAPCO was established in 2007, with BOT contract negotiations starting in 2009.

Conversion of foreign currency has proven to be a tricky obstacle in BOT contract negotiations.

Under the prime ministerial Document 1604/TTg-KTN, the Vietnamese government guarantees conversion into US dollar for 30 per cent of the project revenue in VND. However, investors of BOT power projects with ongoing negotiations such as Vung Ang 2 and Van Phong requested up to 100 per cent foreign currency exchange guarantee.