Foreign investor eyeing hydropower projects in Vietnam

23/11/2011

Nguyen Thanh Tan, Chief Representative of SN Power Holding Singapore Ltd in Hanoi, a subsidiary of Norwegian Power Group managed by the Norwegian government, said on Dau tu that the company wants to buy big amounts of stakes of state owned and private run hydropower plants in Vietnam.

The information that Norwegian SN Power Company intends to buy big amounts of stakes of hydropower plants in Vietnam has caught the special attention from the public. This is believed to activate the hydropower merger and acquisition (M&A) market.

Nguyen Thanh Tan, Chief Representative of SN Power Holding Singapore Ltd in Hanoi, a subsidiary of Norwegian Power Group managed by the Norwegian government, said on Dau tu that the company wants to buy big amounts of stakes of state owned and private run hydropower plants in Vietnam. If the affairs succeed, this would make a precedent in the hydropower industry in terms of the mode of ownership.

According to Tan, SN Power plans to buy a lot of stakes of hydropower plants in Vietnam. It is also considering the amount of capital for the investment in Vietnam.

Though the big hydropower projects in Vietnam have had their investors already, Tan believes that there are still many attractive projects which have high feasibility that foreign investors like SN Power desires. It is because the power competitive market in Vietnam is taking shape which is believed to develop more strongly in the upcoming years.

“Hydropower plants will require huge capital, while the projects will develop depending on the characteristics of every nation and every locality,” Tan said.

“Our goal is to share experiences of the Norwegian power group with domestic investors to build and operate hydropower plants in Vietnam,” he added.

Though Tan declined to give information about the number and the names of projects SN Power plans to inject money in, Tan said that the Electricity of Vietnam (EVN) is the nearest targeted partner for the immediate time.

Vietnam is now planning to restructure the power plants of EVN and other power plants, which is really a golden opportunity for experienced and financially capable investors like SN Power to jump into the domestic power market.

It is expected that in the immediate time, SN Power would buy some hydropower plants which have been operational or will be put into operation soon. After cementing a firm position on the Vietnamese power market, SN Power would think of expanding its investment, considering developing new projects.

However, Tan said that the investor well understands the possible risks; therefore, it needs to take cautious steps.

In order to implement its project, SN Power may cooperate with some foreign funds and financial institutions which have deep knowledge about the Vietnamese market, such as IFC (the International Finance Corporation), an arm of the World Bank, which allows to ensure the success of the implementation of projects.

When asked if SN Power thinks that it is a big challenge for the group when the electricity prices in Vietnam remain low, Tan said that the electricity price is really a challenge and risk for all foreign investors. “We would think of the comprehensive measures which allow to minimize the risks and exploit the advantages when the market begins developing,” he said.

“We also hope that the electricity price mechanism would be improved,” he added.

SN Power began exploring the Vietnamese hydropower market in April 2010 when it set up a representative office in Hanoi, aiming to seek opportunities in purchasing stakes of hydropower plants in Vietnam.

SN Power has estimated that in theory, the hydropower potential in Vietnam is about 300 billion Wh per annum, while the technical and economic feasible potential are 123 billion and 75-80 billion Wh per annum.

In related news, a lot of small and medium hydropower plants with the capacity of less than 30 MW, have been offered for sale, since the investors cannot arrange enough capital to continue developing the projects.

The Norwegian power group is implementing hydropower and wind power projects in the Philippines, Nepal, India, Chile, Brazil, Sri Lanka and Peru.

By LM

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