JAKS Hai Duong power plant in jeopardy

PETALING JAYA: JAKS Resources Bhd (JRB) is left to hunt for a new investor for its 1,200 megawatt Hai Duong power plant in Vietnam after its proposed joint venture agreement with China-based Wuhan Kaidi Electric Power Engineering Co (Kaidi) lapsed.
JRB said the agreement lapsed following the non-fulfilment of the condition precedent by Kaidi on or before the extended cut-off date of Mar 31, 2014.
The conditions entailed in the agreement included the execution of the engineering, procurement and construction (EPC) contract, the approval of the board of directors and shareholders of JRB's unit, Jaks Power Holding Ltd (JPH), and Kaidi obtaining relevant approvals for its investment from the Chinese governmental authorities.
"Accordingly, the proposed joint venture shall not take effect," it told Bursa Malaysia yesterday. Kaidi was supposed to be EPC contractor as well as an investor with 40% equity stake in the project.
JRB said it will deliberate on the next course of action including identifying a new equity partner to undertake the 2x600 MW coal-fired thermal power plant project in Vietnam.
This is the third time that JRB has lost a potential investor for its power plant.
Almost three years after JRB gained an investment certificate for its US$2.25 billion coal-fired power plant with the Vietnamese Ministry of Industry, the project has not moved due to its inability to keep its investors.
In April 2013, JRB had announced that Sanjung Merpati Sdn Bhd, which in Dec 2012 entered subscription agreements with JRB's subsidiary JPH to invest in the Hai Duong power plant, decided to terminate the agreement. This was after it lost two partners obtained in early 2012. Malaysian Island Circle Investment Holding Ltd and Chinese Meiya Power Ltd both terminated the partnership in late 2012.
The estimated cost for the plant was US$2.25 billion with 80% of financing to be sourced through loans and the other 20% by equity. It was reported that as of Mar 31, 2013, JRB had invested about US$31 million in the project.
The construction of the power plant, comprised of two 600 megawatt generating units, initially scheduled to begin in the first quarter of 2014.The first and second generating units were to have commenced generation of power in the third quarter of 2017 and the first quarter of 2018 respectively.
In the same announcement yesterday, JRB said its unit, JAKS Pacific Power Ltd, has written to the Ministry of Industry and Trade of the Socialist Republic of Vietnam to seek a waiver from achieving the Financial Close by Oct 30, 2014.
JAKS's Hai Duong Power Company has an agreement to repay US$10 million to the local authorities there for land clearance after financial closure was achieved.