Kyushu Electric Power Co. and Nissho Iwai Corp. announced Wednesday that they will participate in a BOT (build-operate-transfer) power project in Vietnam.

The two firms will assume a one-third stake in the company in charge of the project, Vietnam’s Phu My 3 BOT Power Company Ltd. The company was formed to build a 750 MW power plant in Vietnam that will begin operation at the end of 2003.

Of the one-third stake, Kyushu Electric will provide 80 per cent of the capital and Nissho Iwai will provide the remaining 20 per cent. The entire project is worth about 45bn yen ($373.96m), including Phu My 3 BOT Power’s capital of about 15bn yen.

Investors from the U.K. and Singapore will each provide one-third of the remaining two-thirds of capital for the Vietnamese company.

The Phu My project is a set of power plants, which is intended to reach an eventual capacity of 2400 MW. It is located in the village of Phu My in Ba Ria-Vung Tau province in the southern part of Vietnam.

The Phu My 3 power plant is a combined cycle gas turbine facility. It was ordered in 1999, and was expected to be completed in 2002. The project is being built by a consortium, which includes Statoil, BP Amoco, Tomen and Mitsui as its members. BP Amoco will supply the plant with natural gas from its fields in Block 06-1, Nam Con Son Basin. This will entail the construction of a 400 km pipeline.

The consortium has decided to award the engineering, procurement and construction contract to Siemens. The plant will have two 250 MW gas turbines, combined with a 250 MW steam turbine.

Phu My 3 BOT Power has a 20-year contract to supply power in Vietnam. Thereafter, the facility will be sold to the Vietnamese government.

Vietnam has a severely underdeveloped electricity infrastructure and rapid growth in electricity demand. The Communist government’s policy of opening the market (in a similar way to China) has created rapid economic growth. The government is therefore encouraging rapid expansion in generation capacity to meet this. It is estimated that Vietnam needs to increase its electricity generation from 5000 MW to 12 000 MW by 2005. To do this, Vietnam will add another fifteen power plants to its existing twelve.