Lessons from Nhon Trach

It's difficult to guess from this photo, taken during his recent inspection at the Nhon Trach 3&4 LNG power plant on May 9th, what Minister of Industry and Trade Nguyen Hong Dien was most worried about regarding the project – a nationally important project whose implementation obstacles could be included in textbooks.

The biggest concern for policymakers now, to put it mildly, is nothing less than a power shortage. However, it seems that concern and practical action are not going hand in hand. Some projects and businesses investing in power generation are still struggling to overcome difficulties, with no clear timeline for resolution. A prime example is the Nhon Trach 3&4 project in Dong Nai , a nationally important and key energy project invested in by the PetroVietnam Power Corporation (PVPower).

This is the first thermal power project under development in Vietnam using imported natural gas (LNG), with a total investment of $1.4 billion and a capacity of 1624 MW. Nearly 90% of the work has been completed, but just when it seemed poised to finish on schedule (trial run scheduled for August 2024), the project has encountered some truly unbelievable obstacles.

There is no land available to construct a cooling water discharge channel!

This might sound like a joke, but it's true. PVPower is currently being held back by Tin Nghia Corporation, the company managing the land in the Ong Keo industrial park. The situation is simple: PVPower wants to lease land to build a cooling water discharge channel, a crucial component that prevents the plant from operating. However, Tin Nghia has now reneged on the agreement, raising the lease price to $100/m2, despite a prior agreement reached in October 2021. As a result, the deal is currently stalled.

Minister of Industry and Trade Nguyen Hong Dien (third from the left) during a site visit to the Nhon Trach 3&4 LNG power plant project, invested by PVPower.

Now, after months of complaints, PVPower is in a predicament, not knowing who to wait for to resolve the issue – the People's Committee of Dong Nai province (Tin Nghia Corporation is out of the question), or a higher authority? They've complained many times, submitted many reports, and most recently, on May 9, 2024, PVPower once again, earnestly presented its case to the Minister of Industry and Trade, Nguyen Hong Dien, during his working visit to Dong Nai, with the aim of resolving the project's obstacles.

At this point, the investor's wish is probably simpler than ever: to lease the land directly from the local government, but it's uncertain when this wish will be thoroughly considered!

What would be a reasonable electricity price?

One of the crucial conditions determining the survival of a power plant project is the electricity selling price, and for Nhon Trach 3&4, this is even more important as it relates to the issue of LNG imports as well as bank loans. However, finding common ground with the electricity buyer, Vietnam Electricity Group (EVN), is very difficult at this time.

The real issue now is changing the perspective on what is reasonable. The investor proposed a quality control rate of 72% to 90%, with a selling price of around 2800 VND/kWh. Naturally, EVN (Vietnam Electricity) rejected this proposal. EVN's reasons were clearly stated: this demand creates risks that would increase electricity prices and is unfair to other types of power plants.

EVN's reaction isn't entirely unreasonable considering the current situation, where the average retail price per kWh is just over 2000 VND (excluding VAT). However, the irrationality or rationality of the electricity market shouldn't be confined to the present moment. If we broaden our perspective, once traditional power sources can no longer be developed, coupled with the pressure to implement COP 26, the price proposed by the investor might actually be appropriate in the future.

Lessons from Nhon Trach

The two issues above are two prominent challenges of the Nhon Trach 3&4 project. Of course, these obstacles will eventually be resolved, so what needs to be done now is to consider the lessons learned from this to accelerate other projects and avoid the risk of electricity shortages in the near future.

Now that the implementation plan for Power Development Plan 8 has been issued, there is very little time left. Therefore, if everything is not reviewed, evaluated, and implemented with a completely new mindset, the success of the plan cannot be guaranteed.

To expedite project implementation, the first step is to streamline related procedures as much as possible. The entire process, from assigning the investor to project commencement, needs to be reviewed (including project verification) and any inappropriate elements that negatively impact implementation time should be thoroughly eliminated. In Nhon Trach, a prime example of this needing change is the land leasing process, a task that consumes excessive time for the investor and directly affects project progress.

Furthermore, with LNG power generation, it's crucial to understand that this isn't a standalone project. In reality, it's a chain encompassing LNG import, LNG storage and terminals, gas distribution, electricity generation, grid connection and transmission, and electricity sales. Therefore, addressing issues requires considering the efficiency of the entire chain to achieve long-term benefits; otherwise, conflicts of interest among different stages will become very difficult to resolve.

Ultimately, whether Plan 8 is implemented effectively depends entirely on people, and specifically, on officials at every stage and level of the ministries, departments, and localities. How they handle each submission and each document, and whether they have truly fulfilled their responsibilities, directly impacts the progress and success of the project.

Perhaps the Nhon Trach 3&4 project shouldn't be viewed solely as a PVPower issue anymore. According to the implementation plan for Power Development Plan 8, Vietnam will have 10 LNG power projects by 2030. It's already May 2024; we can all calculate the remaining time, but time is unforgiving and waits for no one!

Source: https://thoidai.com.vn/bai-hoc-nhon-trach-199764.html