Vietnam sets nuclear pace in Southeast Asia

By Andrew Symon

HANOI - General Electric of the United States and Asian rivals in the nuclear power sector such as Daewoo and Toshiba are among companies looking to win big contracts in Southeast Asia as the region's countries turn to the once-shunned energy source to fuel future economic growth.

GE and companies from France, Russia, Canada, Japan, South Korea and China turned out in numbers at a nuclear industry exhibition in Hanoi last month, bidding to help Vietnam develop its first nuclear power facilities.

High global fuel prices in the 1970s resulted in a raft of plants being built in Europe and North America. After a retreat in the 1980s over safety issues, interest in the nuclear option is reviving as Asia's surging power demands help spur global fossil fuel prices and pressure mounts to reduce growth in greenhouse gas emissions.

Vietnam is on track to become Southeast Asia's first country to take the nuclear plunge, with the government and its main energy-related agencies, the Vietnamese Atomic Energy Agency and Electricity Vietnam (EVN), advancing plans for huge expansion in power generation.

Vietnam plans to have four nuclear generation plants with a total of 8,000 megawatts (MW) capacity in operation by 2025. Two of those plants, each with two 1,000 MW units, are to be up and running by 2020 in Ninh Thuan province on the country's central coast. Construction is set to begin in 2015 and the government has earmarked US$6 billion for each plant.

So far, there is little if any public opposition to the development in the authoritarian country, increasing Vietnam's commercial attractiveness to the global nuclear industry.

In Indonesia, the government aims to have its first nuclear plant in operation some time after 2015 on the Central Java north coast. The outlook here is less certain, as public opposition is strengthening nationally and locally, to the extent that at least one Islamic religious leader has issued an edict against the plan. With national, regional and presidential elections scheduled for next year, Indonesia's nuclear plans could be derailed, some industry executives fear.

Thailand is also carrying out a feasibility study for a nuclear plant to be built in the country by 2020, although again public opposition might hinder progress. Community and non-governmental organizations in recent years managed to derail construction of two large coal-fired power plants in southern Prachuap Kirikhan province.

Elsewhere in the region, nuclear feasibility studies are underway by relevant government agencies in the Philippines and Malaysia.

The nuclear momentum appears to be strongest in Vietnam, where the government last August doubled its previous generation target of 4,000 MW to 8,000 MW goal by 2025. A law providing the framework for development of nuclear power plants and foreign investment in the industry, wider civilian applications for nuclear science, and safety and non-proliferation standards and controls is expected to be passed this month by the National Assembly. This will enable the government to get on with project planning and establish a tendering process for power plant construction, fueling and operation.

Before those laws were in place, the recent Hanoi exhibition attracted a who's who of global energy firms. Executives from France's Areva and Electricite de France (EDF) rubbed shoulders with their counterparts from Japan's Toshiba and Federation of Electric Power Companies, South Korea's Daewoo and the Korea Hydro and Nuclear Power Company. Representatives of General Electric, Russia's Rosatom and Atomostroi and China's Guangdong Nuclear Power Company were also present, as were officials of the United Nations' Vienna-based International Atomic Energy Agency.

The four-day exhibition from May 13-17 was the third in the country since 2004. Foreign companies are expected to play critical roles in supplying technology, education and training for Vietnamese scientists, engineers and technicians. The government also clearly hopes to finance the plants' construction through export-import credit schemes of the respective companies' governments.

The exhibition served a dual purpose of providing information to the Vietnamese public about the government's plans. In late May, more than 400 local representatives of the coastal Ninh Thuan province were invited by the government to voice opinions about proposed plants at a seminar co-organized by local power company EVN and Electricite de France. The state-controlled press reported that the response to the plant by the two districts' representatives at the meeting was largely positive.

Powerful diplomacy
The Vietnam exhibition also underlined the close links between business and government in the international nuclear industry.

The French consortium was strongly supported by the French Embassy in media statements and interviews at the Vietnam event. At a press conference, French nuclear power industry representatives pointed to a new government agency, the French International Nuclear Energy Agency, which had been established to provide experts to collaborate with foreign governments on feasibility studies, safety concerns and other issues.

The China Guangdong Nuclear Power Company's presentation signaled China's new goal of entering the global nuclear business as an investor and supplier rather than as a recipient of foreign expertise, equipment and investment. China's nuclear power expansion plans are the most ambitious in the world in terms of scale and speed of development. Established nuclear power players, including from Japan and South Korea, said they see Chinese rivals as a fast-rising, low-cost competitive threat.

Japan's Toshiba, Hitachi and Mitsubishi are also in the nuclear hunt and seem well placed to benefit from Tokyo's strong commercial diplomacy in the region. Coinciding with the Vietnam exhibition, the governments of Japan and Vietnam signed a bilateral assistance agreement. As part of that pact, Japan is scheduled to help Vietnam prepare and plan for the introduction of nuclear energy, educate experts in nuclear power and help the country formulate nuclear safety regulations.

Vietnam has also signed nuclear cooperation agreements with the governments of Russia, France, South Korea and the US. One potential commercial ace up the sleeve of Japanese companies is their government's push for new incentives to invest in nuclear power development in Southeast Asia and elsewhere.

Tokyo is lobbying for new nuclear facilities to be eligible, after the Kyoto climate change accord expires in 2012, for clean development mechanism (CDM) credits for carbon dioxide reduction achieved by not building new coal- and gas-fueled power plants.

Given the scale of nuclear power plants and the fact that plants emit nearly no greenhouse gases, CDM credits that could be sold on global carbon markets and used by companies and governments to meet mandatory carbon emissions targets elsewhere could have huge value. The Japanese government put its case forward at a UN climate change meeting in early April.

The proposal was left on the table, due mainly to developed countries' still strong concerns over safety and weapons proliferation. The Tokyo proposal is expected to resurface at another UN meeting on climate issues in Copenhagen in late 2009. The CDM scheme for nuclear power is expected to get a wider hearing as governments grapple with putting in place a successor agreement to Kyoto.

If adopted, the CDM proposal could have enormous implications for Southeast Asia's nuclear power development. The high capital costs associated with building nuclear power plants are at this point still expected to constrain the region's nuclear future, but those start-up costs would be mitigated significantly if new plants were entitled to CDM credits.