Shipbuilder eyeing power sector

The Vietnam Shipbuilding Industry Group (Vinashin), which has recently signed big contracts to build ships for foreign partners, is now planning to make investment in power plants, which seems to have no close links with the shipbuilding industry.
Vinashin has submitted to the Ministry of Industry the report on its plan to make investment in power plants with the total capacity of 8,000 MW.
In its development strategy, Vinashin plans to upgrade and expand existing factories, while building new shipyards in new places. In the future, industrial zones (IZ) for shipbuilding industry will take shape in three regions, the north, central region and the south, including Cai Lan IZ in Quang Ninh, My Trung (Nam Dinh), Dung Quat (Quang Ngai) and Soai Rap (Tien Giang).
A lot of factories and workshops producing parts serving the shipbuilding industry are being built in the IZs. The competitiveness of Vietnam’s shipbuilding industry depends much on input materials like steel and diesel engines, which, in turn, depend on electricity sources.
Vinashin thinks that one of the most important things it needs to do now is to develop power plants which would allow it to provide stable electricity and at reasonable prices. The total electricity output Vinashin needs in 2007-2015 is 8,300 MW to serve the shipbuilding industry.
There are several factors Vinashin considers as big advantages in implementing power projects.
First, the group plans to raise the localisation ratio of its products to 60% by 2010. In order to reach that end, Vinashin has been making heavy investment in its mechanics manufacturing, which, Vinashin believes, can help it in designing power plants.
Second, Vinashin’s IZs are all located near the coal and mineral exploitation area, as well as big rivers, which would make the providing of materials to power plants more favourable.
The power plants Vinashin plans to build include:
1. coal-run thermopower plants: Hau Giang (3 x 1,200MW), Hai Ha (3 x 676 MW + 2 x 150 MW), Song Hong (3 x 65MW), and Ninh Thuan (2 x 600MW).2. engine-run thermopower plants: Dung Quat-Da Nang (8 x 12,5 MW), Soai Rap (10 x 12,5 MW), Khanh Hoa – Nha Trang (220 MW).3. Hydrpower plants: Tram Tau (Yen Bai, 22MW)4. Wind power plants: one in Quy Nhon City in Binh Dinh province in the central region (40 x 600KW).
It is clear that the investment in a series of power plants which have the total capacity of 8,000 MW will require a huge sum of capital. On average, the investment capital for 1 MW is $1mil for thermopower, while the figure is even higher for hydropower. Experts have estimated that Vinashin will have to budget some $8bil to develop power projects by 2015. The amount of capital for power projects turns out to be much higher than the investment capital for the shipbuilding industry, the main production field of Vinashin.
Experts have warned that such a huge sum of capital will be very difficult to come by. The Electricity of Vietnam (EVN), which has been focusing on the electricity sector, has created only 8,000 MW in the last ten years, from 1996 to 2007.
It seems to be a tendency now in Vietnam that big economic groups try to do business in many fields. EVN, for example, has decided to invest in telecommunications, while the shipbuilding corporation wants to invest in the power sector. If the Vietnam Steel Association had similar arguments as Vinashin, it would also make investment in power projects, which would provide power to run its steel mills.
In its reply, the Ministry of Industry has asked Vinashin to provide detailed reports on the conditions for implementing the projects, capital arrangement solutions, and other information for the ministry’s consideration.
Source: VietnamNet