Posted on 24 Nov 2015
Local companies Hoa Sen and Hoa Phat JSC have shown interest in taking over a proposed steel production complex in the central province of Quang Ngai's Dung Quat Economic Zone from a Taiwanese investor who has backed out due to financial reasons.
According to a source from the Dung Quat Economic Zone management, the investor of the Guang Lian steel plant had reported inability to raise funding for the multi-billion-dollar project a few months ago.
Hoa Sen and Hoa Phat are keen to develop their projects at the site of the Guang Lian steel project.
However, there are signs that Quang Ngai Province authorities prefer Hoa Phat, official comments made on a document on Hoa Phat's bid indicate.
Hoa Phat has proposed building a $2-2.5 billion steel plant with an annual capacity of four million tonnes in two phases.
The company plans to bring in 65 per cent of the amount and obtain bank loans for the rest.
It wants 300-350 hectares of land for the plant, and 150ha for the first phase, at the site of the suspended Guang Lian plant.
In the document, Quang Ngai officials note that Hoa Phat has experience in building and operating a 1.2 million tonne per year steel plant in the northern province of Hai Duong and the financial wherewithal to raise the needed amount.
They also believe that the 300-350ha requirement by Hoa Phat is better than the 504ha demanded by the Taiwanese company though that was to have been a 5 million tonne plant.
Hoa Phat has asked the Government for the same tax and rent incentives it offered Guang Lian.
Provincial authorities have said if Hoa Phat takes over the project and keeps the terms unchanged, it can enjoy all the incentives stated in the licence issued to Guang Lian.
But any changes to the terms of the project could see a change in the incentives too, they said, though in both cases approval would have to be obtained from the Government.
Quang Ngai authorities had earlier written to Hoa Sen after it said it wanted to build a steel plant at the location of the Guang Lian project, saying if the company invests in a new project, the incentives would be in line with new laws on land, investment and construction.
They said Hoa Sen should consider a plant with a capacity of 3-5 million tonnes since it would be appropriate for the area and the depth of the local port, they said, adding if it chooses to produce five million tonnes, it would get a maximum of 504ha, the same as Guang Lian.
Hoa sen has yet to respond.
