POSCO Energy wins $2.5 bil. power plant project in Vietnam

By Lee Hyo-sik

POSCO Energy has secured a $2.5 billion project to build a coal-fired electrical power plant in Vietnam as part of its efforts to find new business opportunities abroad.

The firm’s envisioned 1,200 megawatt power plant is the second of its kind in the Southeast Asian nation, according to company officials. It is expected to facilitate the outfit’s goal of becoming a leading electricity generator in the rapidly-growing region.

The private power firm affiliated with steelmaker POSCO said Thursday that it gained the license from the Vietnamese government to build and operate the coal-fired power plant in an industrial complex, 270 kilometers south of Hanoi. The company began operating its first plant in Vietnam in October 2015.

Under the deal, POSCO Energy will begin construction in 2022 after raising the necessary capital. When the plant is completed by 2026, the company will operate the facility for 25 years, supplying power to the Electricity of Vietnam Group to retrieve its investment.

“We are glad that the Vietnamese government chose us as an energy business partner. We were working really hard to win this project over the past two years,” company CEO Yoon Dong-jun said.

“The envisioned facility will supply electricity to cement, steel, chemical and machinery companies that will be in the industrial complex in the Nghe An Province,” Yoon said. “POSCO Energy will build the state-of-the-art, environment-friendly power plant that reduces pollutant emissions, using our latest technologies.”

In Botswana, POSCO Energy is also building a 300 megawatt coal-fired power plant, which it will run for 30 years, beginning 2020.

Over the past few years, the company has been accelerating its entry into developing economies to offset its sluggish sales at home.

Its sales have been declining as the Korea Electric Power Corp. (KEPCO) buys less electricity from private power firms that generate most of their power through burning liquefied natural gas (LNG). This is much more expensive to produce electricity with, than it is with nuclear or coal-fired power plants.

Given stable power demand in recent years, KEPCO has been refraining from purchasing electricity from LGN plants.

POSCO Energy’s sales declined to 1.7 trillion won in 2016 from 2.6 trillion won in 2014, with its operating profit falling to 90 billion won from 119 billion won.