PetroVietnam is the investor of many large projects

The Ministry of Industry and Trade (MOIT) has consulted with relevant ministries and branches on the transfer of the Long Phu III thermal power project from PetroVietnam to a Chinese investor.

Prior to that, the ministry proposed that the government transfer the Quynh Lap 1 thermal power project, which was initially assigned to Vinacomin, to the joint partners Geleximco and Hong Kong United Investors Holding.

Meanwhile, foreign investors are applying for licenses to develop other thermal poower projects, including Quynh Lap 2, Quang Trach 1, Quang Trach 2 and Hai Phong 3. 

Explaining their decisions to transfer projects to private investors, the state-owned economic groups, especially PetroVietnam and Vinacomin, said they had found it difficult to seek capital.

The problem is that the economic groups are also the investors of many other huge projects as well, each of which needs hundreds of million of dollars.

The national oil & gas group, PetroVietnam, for example, said it has been assigned to develop four coal-fired thermal power projects, seven gas-run thermal power projects and some upstream gas exploitation projects. 

Meanwhile, Vinacomin reported that it cannot satisfy the requirement of having $425 million worth of stockholder equity to be able to develop Quynh Lap 1 project.

Vinacomin said it might not be able to borrow money from banks because it doesn’t have the reciprocal capital equal to 20 percent of the project’s total investment capital, a requirement for banks to consider to provide loans. 

Analysts commented that withdrawing from huge projects is a growing tendency among state-owned enterprises. The enterprises made massive investments in projects some years ago and their financial capability has weakened.

How to transfer projects remains a heady question. As initial investors, state owned corporations poured money into the projects. But it is difficult to take back the money as new investors may be unwilling to pay.

In theory, it would be easier to find new investors if the state makes the projects more attractive by providing additional guarantee or making additional commitments during the project duration. However, analysts said this is not a good choice.

Another problem is that most of the new investors who are willing to take over the projects are enterprises from China. For Vietnamese, Chinese technology is backward, Chinese contractors are unprofessional and Chinese-invested projects cause pollution.

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