A joint venture between ACWA Power of Saudi Arabia and Taekwang Power Holdings of South Korea has signed an agreement to invest $2.2bn in Vietnam’s Nam Dinh coal-fired power plant.
The 1.2GWÂ Nam Dinh 1 plant will be designed and built by the venture, who will operate it for 25 years before transferring it to the government of Vietnam.
The plant, which is 150km southeast of Hanoi, is seen as a key to easing Vietnam’s electricity needs.
Rajit Nanda, the chief investment officer of ACWA Power, said in a statement: "We acknowledge the support of the Ministry of Industry and Trade for this project, and believe that this marks the start of a long and fruitful relationship between ACWA Power and Vietnam."
The project is scheduled to start in mid-2016 after eight years of negotiations and will use coal provided by state coal mining group Vinacomin.
Vietnam is presently putting in place its "seventh electricity generation development plan", which aims to deal with a growth in demand of about 11% a year, according to the Asian Development Bank.
The plan aims to reach a total installation capacity of 137GW, of which 62% would be produced by thermopower.
The country presently generates about 36% of its electricity from coal, 25% from oil and gas, 33% from hydropower and the remainder from renewables.
As well as Nam Dinh, another 1.2GW plant is to be built at Long Phu plant in the Mekong Delta by India’s Tata Power (pictured). This $1.8bn plant will also be procured under a build-operate-transfer model.
Vietnam is planning to exploit its Red River coal basin, which is thought to have reserves of 236 million tons.
Top image: A rendering of the 1.2GW Nam Dinh 1 coal-fired power plant (Taekwang Power Holdings)