Barriers to Nhon Trach 3-4 Power Plants’ construction progress

Construction at Nhon Trach 3 power plant. Photo by Ha Chien

Working through Tet

The Nhon Trach 3 and 4 Power Project Management Board leaders state that at present, the construction volume is projected to be over 75%, essentially achieving the scheduled completion date. The project's major components are virtually finished. Specifically, the turbine section, which is regarded as the "heart" of the plant, has already been installed and engineers and experts from both home and abroad are working quickly in order to install accessories to finish the category.

If everything proceeds according to the plan, the Nhon Trach 3 Power Plant will be finished and will be able to generate commercial power in November, 2004, whilst the Nhon Trach 4 Power Plant will follow suit ahead in May, 2025.

To avoid delays that could result in losses for the State capital and to take advantage of the favourable weather conditions in the South during the dry season, the Project Management Board has mobilised contractors to closely adhere to the goals of safety, progress, and work quality. Workers in specific project categories will only take the first day off from work on Giap Thin 2024's Lunar New Year, while all other workers will continue their tasks at the construction site in order to hasten the project's completion.

Obstacles ahead

The main unresolved challenges that the project is now experiencing are the power purchase agreement (PPA), the project's land lease, along with the power connection of the Nhon Trach 3 Power Plant.

One issue that has to be settled promptly, in the opinion of the Project Management Board leaders, is the PPA contract between EVN and PV Power. The next steps are committing to a long-term power purchase (Qc) and figuring out the pricing range for LNG power generation. These represent the most crucial elements required for the Nhon Trach 3 and 4 Power Plant projects to be implemented successfully and without a hitch.

With regards to connection work, PetroVietnam Power Corporation (PV Power) and pertinent parties mutually suggest a proposal for a temporary connection to the current Nhon Trach 1 and Nhon Trach 2 Plants' power transmission system for testing and capacity release. This is a result of the electricity line linking Nhon Trach 3 Power Plant to the national power system taking longer to install than expected. The delay was brought about by problems with compensation for Nhon Trach urban planning's site clearance.

Another noteworthy problem is the disagreement between the Nhon Trach 3 and 4 Power Project Management Board and the land leasing entity, Tin Nghia Group.

Before the Lunar New Year, PV Power issued a document stamped as "urgent" and sent it to Deputy Prime Minister Tran Hong Ha and relevant authorities, reflecting that Tin Nghia Group, the organisation in charge of overseeing Ong Keo Industrial Park, had obstructed the construction of the cooling water discharge channel at the park's intersection with Road No. 4.

The issue is part of Tin Nghia Group's idea to impose an infrastructure usage tax of roughly 100 USD/m2 as a one-time payment method for the four years of construction and the 25 years of project operation. PV Power, meanwhile, thinks there isn't a solid legal foundation for the aforementioned charge.

As of February 15, the project's cooling water discharge channel has not been implemented.

According to PV Power, this puts the project at risk of not being finished on time, which in turn might impact 16 contractors and subcontractors with 1,858 workers and thousands of pieces of machinery and equipment at the construction site. It is estimated that PV Power will lose almost VND1 trillion in revenue from gas offtake for LNG providers, in addition to hundreds of billions of VND in fines and compensation for EPC contractors caused by schedule delays.

PV Power is now awaiting feedback from the Government and leaders of Dong Nai province, who have since requested that Tin Nghia Group stop any practices that impede contractors and investors while construction is underway. This would help to guarantee that the project is completed on time, thereby contributing to the national energy security.