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Russian contractor seeks to withdraw from billion-dollar power project in Vietnam

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Russian power engineering company Power Machines is seeking to withdraw from the billion-dollar Long Phu 1 thermal power plant project in Vietnam due to U.S. sanctions. 

Russian contractor seeks to withdraw from billion-dollar power project in Vietnam

The construction site of the Long Phu 1 thermal power plant project. The project has been suspended since Power Machines was subject to sanctions from the U.S. – PHOTO: VNA

Speaking to Tuoi Tre Online on March 8, a leader of the management board of the Long Phu 1 thermal power plant project said the board has proposed that the Vietnam Oil and Gas Group (PVN) terminate the engineering, procurement and construction (EPC) contract for the project with Power Machines.

The management board explained that the Russian contractor is subject to sanctions from the U.S. and is hardly able to implement the EPC contract. 

The 1,200 MW coal-fired Long Phu 1 thermal power plant has been being developed in Long Phu District in the Mekong Delta province of Soc Trang. The joint venture between Power Machines and PetroVietnam Technical Services Corporation, a member of PVN, is the EPC contractor of the project, with the EPC contract worth US$1.2 billion. 

According to the EPC contract that was signed in 2014, the first steam turbine of the plant will be put into operation in October 2018 and the second turbine in February 2019.

However, in 2018, Power Machines was subject to U.S. sanctions following the annexation of Crimea by Russia. At that time, the Long Phu 1 thermal power plant had been approximately 72% complete. 

The leader of the management board of the Long Phu 1 thermal power plant project said after Power Machines faced sanctions, the Russian contractor struggled to implement the EPC contract and the project was suspended when it was 77.56% complete.

In February 2019, Power Machines suspended the EPC contract for “force majeure reason”. However, the Vietnamese investor didn’t accept the U.S. sanctions on Power Machine as the “force majeure reason”.

In September 2019, Power Machines sued the investor and PetroVietnam Technical Services Corporation at the International Arbitration Center in Singapore. Power Machines wanted to withdraw from the project with zero losses and asked the Vietnamese side to compensate for all the money the company had spent. 

However, when the negotiations were still ongoing, the Russia-Ukraine crisis occurred and several Russian banks were removed from the SWIFT international payments system, limiting their transactions via the banking system.

According to the management board of the Long Phu 1 thermal power plant project, even if both sides come up with the compensation for Power Machines, payments cannot be made.

“To minimize losses and take advantage of the EPC work that has been done, we propose preparing necessary procedures to select the new EPC contractor and resume the project as soon as possible,” Nguyen Doan Toan, head of the project’s management board, said. 

Up to now, the Vietnamese side has invested nearly VND13 trillion (US$570 million) in the project. 

Source: Saigon Times

Source: https://vietnamnet.vn/en/business/russian-contractor-seeks-to-withdraw-from-billion-dollar-power-project-in-vietnam-821402.html

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Vietnam’s bond market slightly down in Q3, but up 21% yoy: ADB

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Vietnam’s local currency bond market at the end of the third quarter of 2022 showed a marginal contraction of 0.2 percent quarter-on-quarter (q-o-q) to VND2,323.5 trillion (US$97.4 billion), after its strong growth in the previous quarter, according to the latest Asia Bond Monitor (ABM) by the Asian Development Bank (ADB).

This slowdown has reserved the previous quarter’s rapid growth of 8 percent q-o-q, but compared with the same quarter in the previous year, Vietnam’s bond market grew 21.1 percent year-on-year (y-o-y) in the period, slowing from the 31.4 percent y-o-y expansion in the previous quarter.

The decline was mainly due to a contraction in the government bond segment and a slowdown in the corporate bond segment, the ABM, which was issued on Friday, reported.

Such a situation in Vietnam has resulted from the overall context that emerging East Asia witnessed the accelerating deterioration of financial conditions and rising bond yields between August 31 and November 4, largely driven by aggressive monetary tightening in major advanced economies in the world.

In respect of government bonds, Vietnam’s local currency government bond market at the end of September contracted 2.0 percent q-o-q to VND1,604.9 trillion ($67 billion).

Much of the decline can be attributed to central bank bills, whose outstanding bond stock fell significantly by 70.3 percent q-o-q in the third quarter of this year.

In contrast to the previous quarter’s aggressive expansion, the ABM said, central bank bills displayed the largest decline among all bond segments during the third quarter, with the total stock of central bank bills slumped to VND30.4 trillion ($1 billion) at the end of September from VND102.4 trillion ($4 billion) at the end of June.

As regards corporate bonds, growth in the corporate bond segment moderated to 4.1 percent q-o-q in the period from 9.5 percent q-o-q in the previous quarter, according to ABM.

At the end of September, the total outstanding corporate bond stock climbed to VND718.6 trillion ($30 billion) and was mainly dominated by the banking and property industries, which collectively accounted for 75.3 percent of the aggregate corporate bond stock.

Vietnam’s top 30 corporate issuers, largely comprising firms from the banking and property sectors, including a few finance and energy firms, had an aggregate bond stock amounting to VND448.6 trillion ($18.8 billion) at the end of September, which was equivalent to 62.4 percent of the total local currency corporate bond market. 

The top corporate issuer remained the state-owned Bank for Investment and Development of Vietnam (BIDV), with an outstanding bond stock of VND58.4 trillion ($2.45 billion) at the end of the July-September period, accounting for 8.1 percent of the total corporate bond stock of Vietnam.

The ABM also noted that the Vietnamese government promulgated Decree No. 65 in September, amending the existing regulations on the offering and trading of privately issued bonds, with an aim to enhance transparency and sustainability in the bond market by tightening disclosure requirements and imposing stricter conditions on bonds’ private placements. 

The new legal document was developed to protect investors in several key areas, such as limiting the purpose of bond proceeds, implementing new requirements on the issuer’s credit rating, and mandating additional disclosures by the issuers. 

According to the Vietnam Bond Market Association (VBMA), the total volume of corporate bond issuance in the third quarter of 2022 decreased by about 68 percent y-o-y.

Construction and real estate groups saw the most declines in bond issuance value in the period, with the drops of 98.7 percent and 93.4 percent, respectively.

Most corporate bonds issued in the third quarter of 2022 had maturities of 1-3 years, accounting for about 52 percent of the total issuance volume, with an average issuance yield of 7.17 percent per year, a slight increase from the quarter earlier.

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Source: https://tuoitrenews.vn/news/business/20221126/vietnams-bond-market-slightly-down-in-q3-but-up-21-yoy-adb/70203.html

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Modern pharmacies thrive in Vietnam

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Vietnam has witnessed the fast growth of pharmacy chains as Vietnamese people’s spending on pharmaceutical products amounted to US$6.6 billion last year, according to the Vietnam Report.

Vietnam’s healthcare market was valued at $16.2 billion by 2020, accounting for 6 percent of the country’s gross domestic product (GDP). 

Total health spending increased from $16.1 billion in 2017 to over $20 billion in 2021, and is projected to reach $23.3 billion in 2025 and $33.8 billion in 2030, with an annual average growth rate during the 2020-30 period expected at 7.6 percent.

Nearly 90 percent of pharmaceutical manufacturing, distribution and trading enterprises reported higher revenue, and some 80 percent of them recorded profit growth in the first nine months of this year compared to the same period in 2021, according to a survey conducted by the Vietnam Report in October and November.

The experts participating in the survey said that the COVID-19 pandemic created a faster shift in the revenue structure of the pharmaceutical industry in different ways.

The outbreaks of the viral disease caused people to limit their visits to hospitals and switch to buying drugs to treat COVID-19 symptoms and health supplements in the post-COVID-19 period.

Big names in the pharmaceutical retail industry such as Long Chau, Pharmacity, and An Khang are wasting no time expanding their market dominance.

They aim to reach 7,300 pharmacies by 2025, or 16 percent of the domestic market share.

These modern pharmacy retailers win market share from traditional pharmacies as the government gradually introduces stricter regulations for pharmaceutical retail businesses, including tighter control over prescription drugs and the rollout of electronic prescriptions.

Besides, public hospitals’ more caution in drug procurement offers more advantages to pharmacies.

On the other hand, over-the-counter drugs accounted for ten percent of pharmacies’ sales in 2021 and continued to improve by the end of the first quarter of 2022.

The experts expect the market to become more competitive in the future due to the emergence of new businesses.

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Source: https://tuoitrenews.vn/news/business/20221126/modern-pharmacies-thrive-in-vietnam/70198.html

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Citigroup converts $1 mln worth of bonds in Vietnam’s property developer No Va Land to 271,000 shares

Vietnam’s fourth-biggest listed property developer No Va Land said Citigroup has converted $1 million worth of its five convertible bonds into around 271,000 shares of the company.

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Reuters previously reported No Va Land was firing staff and seeking urgent cash as it struggles to pay creditors, showing signs of distress in the real estate sector.

The Vietnamese government’s move to tighten rules on corporate bond issuance and restrict their refinancing have left some developers facing a credit crunch.

The conversion price, according to a No Va Land statement dated November 22, was at 85,000 dong ($3.42), while shares were trading at 21,950 dong as of 0431 GMT on Thursday, the lowest level since the company listed on Ho Chi Minh Stock Exchange.

Trading of company shares were lacklustre over the past month, data from Ho Chi Minh Stock Exchange shows. However, a large volume of 128 million shares of the company was traded on the day of conversion.

Founded in 2007, No Va Land is active mostly in residential property and luxury resorts. The company’s share value has dropped nearly 76% since the beginning of this year.

No Va Land has been the biggest issuer of corporate bonds among Vietnam’s property firms this year, says industry body Vietnam Bond Market Association, placing debt worth 9,857 billion dong ($396.3 million).

In a separate statement, No Va Land said it has actively worked with both domestic and international financial institutions to ensure financial health and to be fully prepared for the upcoming period.

($1 = 24,847 dong)

Source: Reuters

Source: https://e.nhipcaudautu.vn/companies/citigroup-converts-1-mln-worth-of-bonds-in-vietnams-property-developer-no-va-land-to-271000-shares-3349242/

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