(Yicai Global) July 30 -- The first unit of Chinese-funded Vinh Tan coal-fired power plant was put into operation last Friday to increase the electricity supply in southeastern Vietnam.

China Southern Power Grid launched the Unit 1 in Vinh Tan, which is the first production capacity cooperation project in Vietnam under the Build-Operate-Transfer investment model, the state-owned Guangzhou-based firm said in a statement. The BOT structure grants the financier and the constructor of the project rights to operate the site for an agreed upon period of time.

Saigon plans to turn the region into a power generation hub with a total installed capacity of 620 million kilowatts and annual power supply over 45 billion kilowatt hours. The completion of the hub will solve the power shortages in southern Vietnam and promote local social and economic development, the Vietnamese government released earlier.

China Southern Power Grid is the biggest investor with its 55 percent stake in the project that has a total funding of USD1.8 billion. The second-largest investor is China Power International Development with 40 percent of the total, and local Vinacomin Electricity has the remainder.

The parties will altogether build two supercritical thermal power units with the combined capacity of 620,000 kilowatts over the period of 4 years and a franchise period of 25 years. Upon expiration, they will be transferred to the Vietnamese government for free.

The project construction started in July 2015, and the first unit was completed five months ahead of schedule while the second unit is planned to be finished in June 2019.

Vinh Tan will reduce carbon dioxide emissions by about 20,000 tons per year relative to subcritical units of the same size, and meet the power demand of 1.25 million local residents. 

During construction, the project was estimated to bring local firms CNY1.3 billion (USD190.7 million) through business in procurement, services, and engineering subcontracting. More than 70 percent of labor was locally hired and at the peak, over 2,700 local workers were hired.

Editor: Emmi Laine