| The energy sector represent
one of the top opportunities for U.S. companies, thanks
to their expertise in the field and strong growth
in demand.
Electricity generation is scheduled to double
between 2005 and 2010, as energy demand outstrips
economic growth by a factor of two, says Lai Quang
Thuc, Vice Minister of Planning and Investment.
According to Thuc, foreign firms will be directly
involved in the growth plan and will find plenty
of opportunities. Of the 300 projects that the government
has put on a priority list for foreign investment,
50 are in the energy field.
Nguyen Xuan Chuan, the Vice Minister for Industry,
confirms the government’s interest in privately
built and operated power generation plants under the
BOT (build-operate-transfer) scheme. The first trials
of the scheme will take place in rural areas, where
conditions are the most difficult, says Chuan. If
a company can operate profitably there, the concept
is considered proven.
According to Electricity of Vietnam, there are already
20 domestic and foreign investors involved in the
construction of power generation plants. The Phu My
2 thermal power plant in southern Ba Ria-Vung Tau
province is the first private infrastructure project
in the country. It was built at a cost of $480 million
and is operated under the BOT mode by the Mekong Energy
Company, owned by an international consortium. Once
completed in December 2004, the plant will sell electricity
to EVN.
American Kidwell International Co. is building another
private plant scheduled to be put into operation in
2004.
At present, EVN is looking for investors to support
the construction of the large hydroelectric scheme
in Son La province.
Vietnam is also looking for foreign investors to subscribe
the massive upfront cost in oil and gas prospecting.
Some areas are not fully explored, says Vice Minister
Chuan, and in other cases, such as reserves that are
technically hard to explore but for which experimental
technologies exist, foreign firms are sought for their
technology and expertise. Product sharing contracts
are offered in these ventures.
The advantage of BOT schemes is that the cash-strapped
Vietnamese government does not have to put up the
capital for construction or exploration. The investor
builds and operates the facility and has a contractual
period (in general 20 years for power plants) to recoup
the investment. After that period, the contractor
hands over the keys to the government, which then
has on average another 10 years of life in a plant
for which it has paid nothing at all.
Schemes like this have successfully been executed
around the world. |
