The National Oil and Gas Group (PetroVietnam) and a consortium of three companies signed a contract for the Long Phu 1 thermal power plant in Hanoi on December 28.

The consortium, which consists of Power Machines, BTG Holding and PetroVietnam Technical Services Corporation (PTSC), signed an engineering, procurement and construction (EPC) contract with PetroVietnam.

About 70 percent of the capital for the EPC contract will be funded through loans, while the remaining 30 percent will be funded by the project's investor, PetroVietnam.

The foreign contractors in the consortium, Power Machines and BTG Holding, will be responsible for arranging capital and ensuring that the project is completed and pilot operations begin.

PTSC, along with other domestic contractors, will be responsible for the construction and installation of machinery of the project.

Speaking at the signing ceremony, Do Van Hau, PetroVietnam's general director, said the group has been investing heavily in electricity generation as directed by the Government.

Hau said PetroVietnam aims to make up to 16 percent of the country's total power output and become the second-largest generator of electricity in Vietnam .

The 29.5 trillion VND (1.39 billion USD) project, which has a capacity of 1,200MW, will generate 7.8 billion kWh annually.

It is one of five thermal power plants that will be planned and executed by the group. It is expected to meet the demand for electricity in the Delta region between 2015 and 2020.

Deputy Prime Minister Hoang Trung Hai noted that the region is forecast to face a deficit in electricity supply by 2017 because of increasing demand as a result of economic growth. It is the main reason why the project has become a top priority.

He urged PetroVietnam and the consortium to accelerate the project's execution to ensure the adequate supply of power to the region.

The Long Phu 1 coal-fired power plant is one of three plants at the Long Phu Power Plant Centre, which includes Long Phu 1 (2x600MW), Long Phu 2 (2x600MW) and Long Phu 3 (2x1000MW), as well as other plants. Covering an area of 420.5ha, the centre is located in southern Soc Trang province's Long Phu district.

The Long Phu 1 power plant is designed to have two units, which will use a supercritical technology pulverised coal boiler, along with other systems for coal handling, limestone handling, ash handling and a water treatment system./.