US sanctions stymie $1.3bn Vietnamese power plant

US sanctions against Russia have prevented Power Machines, the Russian power engineering company building a $1.3bn power plant in southern Vietnam, from importing the equipment it needs to complete construction, Vietnamese media report.

Around 20,000 tons of equipment including two General Electric turbines that were ordered for the 1.2GW Long Phu 1 thermal power plant under construction in Soc Trang Province are frozen in the US, reports newspaper VN Express, citing a memorandum by Vietnam’s State Capital Management Committee (SCMC), which represents PetroVietnam (PVN), the owner of Long Phu 1. 

Power Machines was subject to sanctions in January 2018 after it sold turbines to a power plant in the Crimea.

The SCMC’s report highlighted concerns over the preservation of the equipment during its storage. In June, Trinh Dinh Dung, Vietnam’s deputy prime minister, instructed PVN to coordinate with the Power Machines to ensure that equipment did not rust.

Work began on the project in 2015 and the first of its super-critical 600MW turbine was to have been installed in 2018. PVN has said that its cost is likely to rise to $1.7bn, of which 30% is being met from its own funds with the remainder to come from commercial loans.

One of the GE D850 steam turbines subject to the embargo (GE)

The 115ha Long Phu 1 plant is part of the Long Phu Power Centre, which will ultimately contain three coal-fuelled stations with a total installed capacity of 4.4GW. It is one of the main projects envisaged by the government’s 2011-20 National Power Masterplan.

Long Phu 1 will use some 3 million tonnes of coal from Australia and Indonesia, which will be transported along the Hau River by 10,000 tonne barges. The generating process will be controlled by automation technology supplied by Finnish company Valmet.

Vietnam is planning to invest $150bn in its energy sector by 2030 in order to prevent a lack of power holding back the country’s rapid economic growth. This hit a nine-year high of 7% in the first nine months of the year, with industry and construction growing 9.4% and contributing 53% of the total.

Top image: A design image of the Long Phu plant (Valmet)

Further reading:

• Vietnam to begin work on $6bn LNG import terminal plan next month
• Vietnam set to green light $56bn rail line this year
• Vietnam to tender $5bn motorway project in August