HANOI - A South Korean firm and a Chinese sovereign wealth fund on Thursday agreed to buy stakes in a power project in energy-hungry Vietnam, the project developer said.
South Korea's Posco Power Corp will take a 30 per cent stake in Hanoi-based AES-VCM Mong Duong Power Co Ltd, which is developing a coal-fired electricity plant it says is Vietnam's largest-ever private-sector power project.
China Investment Corp will take a 19 per cent interest, while Vietnam's state-owned minerals group Vinacomin will sell its 10 per cent stake, AES-VCM said. Financial terms were not disclosed.
AES-VCM is an indirect affiliate of US-based power producer AES Corp, a Fortune 500 company that will retain 51 per cent interest in the project, down from 90 per cent.
The firms signed agreements in Seoul on Thursday to implement the deals, AES-VCM said, adding that the 1,240 megawatt facility will cost a total of about $1.9 billion.
"The joint venture arrangements signed today will help ensure that the financing is properly obtained and the project construction schedule can be met successfully," said Ian Fox, chief executive officer of AES-VCM.
The Mong Duong 2 plant in the northeastern province of Quang Ninh will be developed under a build-operate-transfer (BOT) framework, meaning it will be transferred to government ownership after 25 years of operation.
Construction is expected to start in the middle of this year, with commercial production from the end of 2014.
"Mong Duong 2 will be Vietnam's first coal-fired BOT project and the largest private-sector power project in the nation to date," AES-VCM said.
In December, AES-VCM Mong Duong Power said it had awarded a contract worth more than $1 billion to South Korea's Doosan Heavy Industries and Construction to build the plant.
Official media in Vietnam reported on Tuesday that the government will raise electricity prices by 15 per cent next month to help attract investment for new power plants in the country, which experiences periodic blackouts.