Hoi Xuan Hydropower Plant has not been able to "rejuvenate", banks are stuck with a debt of 689 billion VND

The hydropower project worth over VND3,300 billion, which started in 2010, has yet to be completed. The project used USD125 million in loans from foreign banks with government guarantees, and Agribank is also stuck with hundreds of billions of VND in capital.

Editor's note:
The Standing Committee of the Central Steering Committee on preventing and combating corruption, waste and negativity agreed to put 4 cases and incidents with signs of waste under monitoring and direction, namely the project of the Operation and Trade Center Building, Vietnam Cement Corporation (Vicem); the Hoi Xuan Hydropower Project, Thanh Hoa Province; the project of building the headquarters of the Ministry of Foreign Affairs ; Sub-project 2 (Lim - Pha Lai), part of the Yen Vien - Pha Lai - Ha Long - Cai Lan railway project.

These are all projects that have lasted for many years, are unfinished/only partially completed and show signs of serious waste.

Hoi Xuan Hydropower Project is located in Phu Xuan Commune, Quan Hoa District, Thanh Hoa Province with a total investment of more than 3,320 billion VND, and started construction in March 2010. The project is invested by Hoi Xuan Electricity Investment and Construction Joint Stock Company VNECO.

Hoi Xuan Hydropower Plant has been "shelved" since 2018 until now. Photo: Le Duong

According to the design, Hoi Xuan Hydropower Plant has a capacity of 102 MW, is a large hydropower project under the national power planning. The project is built with three units, with an average annual electricity output of more than 432 million kWh.

According to the plan, around October 2012, Hoi Xuan Hydropower Plant will block the flow for the first time, at the end of 2013 block the flow for the second time, by mid-2014 the reservoir will store water and generate electricity from unit number one in September of the same year.

At the beginning of the project, the investor carried out construction vigorously and the workload was also deployed quickly. However, at the end of 2014, the project was stopped.

The factory has installed a power grid system but cannot operate yet. Photo: Le Duong

Immediately after that, Dong Mekong Service - Trade - Production - Construction Company Limited bought back shares and became the major shareholder of Hoi Xuan Electricity Investment and Construction Joint Stock Company, holding 91% of controlling shares.

To have capital to continue implementing the project, the investor was guaranteed by the Government for a commercial loan of 125 million USD from Goldman Sachs (USA). Thanks to that, the project continued to be constructed again from 2017. By the end of 2019, the hydropower plant had achieved 93% of the project volume. At this time, the investor also began to stop the project.

Many construction projects are still unfinished. Photo: Le Duong

According to the leader of Quan Hoa district, the Hoi Xuan hydropower project stopped construction since the beginning of 2019. In 2024, the investor allowed machinery and workers to resume construction, but only worked sporadically for a short time and then stopped again until now.

According to the district leader, the hydropower project was initially expected to contribute significantly to the local development. However, the project was stopped, causing many consequences and significantly affecting the lives of people in the area affected by the hydropower reservoir.

The beams of the project have also been left unused for many years. Photo: Le Duong

Specifically, the reservoir area of ​​the Hoi Xuan hydropower project has more than 655 hectares of land affected, in Mai Chau district (Hoa Binh) and Quan Hoa district (Thanh Hoa). Nearly 1,900 households in these two localities were affected, of which about 500 households had to be resettled to new residences.

Currently, the project is still in existence, stuck with compensation for site clearance and resettlement arrangements. The construction unit has not yet completed some flood-avoidance routes; many roads are under construction; and construction costs for public works such as schools, medical stations, etc., estimated at tens of billions of VND, have not been paid.

The company's executive building. Photo: Le Duong

Faced with the above situation, the People's Committee of Thanh Hoa province has repeatedly proposed to ministries and branches to soon have solutions to remove obstacles so that the project can restart, so that people can stabilize their lives and production.

“In the short term, we hope that all levels will use the budget to support the construction of civil works for the people. In the long term, we request that Hoi Xuan Power Investment and Construction Joint Stock Company focus on arranging capital to continue implementing the project into operation, in order to stabilize people's lives, contribute to ensuring energy security and economic development,” said the district leader.

Banks stuck with capital at Hoi Xuan hydropower project

The report of the National Steering Committee on Power Development in March 2023 also named this project as a typical example of slow progress. At that time, the main construction items reached about 98% of the volume. VNECO Hoi Xuan Power Investment and Construction Joint Stock Company resumed construction from November 2022, including the following tasks: completing the factory architecture, constructing a traffic bridge over the spillway.

The project investor then committed to completing and operating the factory by the end of the first quarter of 2024.

But in a later document, the Ministry of Industry and Trade said: The Ministry has received 3 reports from VNECO Hoi Xuan. However, the company has only proposed a financial plan to supplement capital to continue implementing the remaining work of the project.

According to PV.VietNamNet 's investigation, Agribank is currently stuck with nearly 700 billion VND in capital (including principal and interest) at the Hoi Xuan hydropower project and has taken action to auction this debt.

Specifically, on October 16, 2024, Agribank Branch 8 announced the selection of an organization to auction debt No. 913 of VNECO Hoi Xuan Electricity Investment and Construction Joint Stock Company under credit contract No. 1702-LAV-201500270 dated April 8, 2015.

The total outstanding debt as of September 26, 2024 is more than 689 billion VND, of which the principal debt is 436.2 billion VND, the provisional interest debt is more than 252.7 billion VND. This debt is auctioned by Agribank with a starting price of more than 706 billion VND.

The collateral for the debt includes 6 mortgaged assets. Notably, there are more than 31.2 million shares of existing shareholders, including Dong Mekong Construction Production Trading Services Company Limited, Vietnam Electricity Construction Joint Stock Corporation and some other shareholders. These shares are mortgaged under the contract dated April 9, 2015 with a total value of more than VND 312 billion, ensuring the outstanding debt of over VND 234 billion and were registered as mortgage at the Center for Registration of Transactions and Assets in Ho Chi Minh City on April 13, 2015.

In addition, the collateral also includes the value of the unfinished construction volume of the Hoi Xuan hydropower project at various times.

Specifically, the construction volume accepted up to April 7, 2015 has a total mortgage value of 107 billion VND, ensuring the outstanding debt of 80.25 billion VND.

The construction volume accepted as of August 3, 2015 has a mortgage value of 90 billion VND, ensuring the outstanding debt of 67.5 billion VND.

Similarly, the construction volume accepted on September 17, 2015, October 31, 2015 and November 30, 2015 has a total mortgage value of VND 49 billion, VND 71 billion and VND 15 billion respectively, ensuring the corresponding outstanding debt of VND 36.75 billion, VND 53.25 billion and VND 11.25 billion.

These assets are all registered as mortgages at the Center for Registration of Transactions and Assets in Ho Chi Minh City at the time of signing the contract.

The fact that Agribank branch 8 is selling this debt shows the prolonged deadlock of the Hoi Xuan hydropower project, which started construction in 2010 but has yet to be completed.

The wandering fate of the "bare bones" trillion-dollar tower is being monitored by the Central Steering Committee . The Vicem Tower has been through a wandering fate when it was unsuccessfully asked to be sold, then wanted to be "resurrected" and put into use. The reason comes from the miscalculations right from the time of investing in the project.

The common point of the 4 trillion-dollar mega-projects under the monitoring of the Central Steering Committee of the Vicem Operation Center Building, Hoi Xuan Hydropower Project, the construction project of the Ministry of Foreign Affairs office building, and Sub-project 2 (Lim - Pha Lai) is that they have an investment scale of up to several trillions but have lasted for many years and have not been completed.

Source: https://vietnamnet.vn/thuy-dien-hoi-xuan-vao-dien-ban-chi-dao-tu-theo-doi-chua-ro-ngay-hoi-xuan-2384686.html