Electricity Vietnam International (EVNI), a subsidiary of Vietnam’s state-owned electricity giant EVN, is no longer involved in the Lower Sesan 2 dam, a Vietnamese Embassy official confirmed yesterday.
Cambodian conglomerate Royal Group and China’s Hydrolancang International Energy Co. Ltd. on Monday signed an agreement in Phnom Penh to build the 400-megawatt hydropower plant in Stung Treng province, which will take five years to complete and will be operated as a private enterprise for 40 years before it is handed over to the government.
While government documents show that EVNI has a 10 percent stake in the project and Royal Group holds 90 percent in partnership with China’s Hydrolancang, Vietnamese Embassy counselor Nguyen Chi Dzung said the Vietnamese company had effectively “quit” the project about two months ago.
According to Mr. Nguyen, EVNI’s 10 percent stake is still nominally included in the deal because the company had conducted initial preparatory studies and environmental impact assessments, which amounted to about 10 percent of the project’s costs. Those studies were carried out between 2007 and 2009.
However, in a statement released after the agreement was signed between Royal Group and Hydrolancang there is no mention of EVNI’s 10 percent share or whether they will make any profits from the project.
“It’s only the Chinese and the Cambodian [companies],” Mr. Nguyen said. “[EVNI] will not get profits…. All the exploration work, feasibility studies has been done, so it is done, it is paid. So Vietnam now is theoretically out of it.”
Though he did not know why EVNI is no longer a part of the project, Mr. Nguyen said that the Vietnamese government is paring back spending.
“A lot of investment in Vietnam has been narrowed down. Vietnam is under restructuring of the economy, so it is understandable that the company has to do this,” he said.
The Vietnamese Embassy invited EVNI to participate in the signing ceremony between the companies and the Cambodian government on Monday, but there was no response from EVNI, Mr. Nguyen said.
Asked to respond to the claim that EVNI was no longer involved, Kith Meng, chairman of Royal Group, reiterated yesterday that EVNI still had a stake in the project.
“They are part of the project. They own 10 percent of the project,” Mr. Meng said.
Though EVNI originally owned 51 percent of the dam project and Royal Group held the other 49 percent, recent Ministry of Industry documents state that the ministry was worried about EVNI’s role, particularly the state-owned company’s “capital ability.”
The ministry “repeatedly requested investment companies, especially Vietnam’s party, to clarify about the capital ability for the investment in this project, but it has never received any confidential clarifications at all,” the statement said. “Since then, the worries about the risk from this project’s investment increased drastically.”
The statement also says that Prime Minister Hun Sen wrote to Vietnamese Prime Minister Nguyen Tan Dung about the dam, which led to a restructuring of the shareholders’ stakes and the entry of China’s Hydrolancang. At that point, EVNI’s share was dropped from 51 percent to only 10 percent, according to the statement.
EVNI’s website shows that the company received a directive from Mr. Dung to reduce their stake in the project.
“On 24th September 2012, the Cabinet Office sent the directive No.1512/VPCP-QHQT conveying the instruction of the Prime Minister about joining investment in Cambodia’s Lower Sesan 2 project,” a report, published in October, says. “Accordingly, EVNI participates by contributing 10 percent of capital of the project, and sending one person to join the project’s Board of Directors.”