What is the truth about Kien Luong thermoelectric project?

On April 17, 2013, the Tuoitre online newspaper reported the opinion of Minister of Industry and Trade Vu Huy Hoang at the meeting with Kien Giang Province’s authority on April 14, 2013 as follows:

“Minister of Industry and Trade Vu Huy Hoang states the delay of the Kien Luong thermal power project has significantly affected the Vietnam’s power development master plan VII and requested Kien Giang Province to submit a written request to the Government to seek other investors for the Kien Luong thermal power project, since the current investor fails to ensure the financial capacity”.

Tan Tao Group asserts this claim is inaccurate and doesn’t demonstrate the extraordinary efforts of the investment owner in the implementation of the project and doesn’t indicate that the Ministry of Industry and Trade should be responsible for the delay of the project which has caused significant losses and damages to the country and the investment owner.

We would like to enclose the list of implementation work for Kien Luong thermal power complex in the ‘Appendix 1' and Photos in the ‘Appendix 2’ for your better understanding.

I would like to sum up the implementation of investment of the project as follows:

1. Project's Legal basis

- On July 23, 2009, Tan Tao Group was granted the Investment License No. 56121000615 by Kien Giang Province’s authority for approval of investment of Kien Luong thermal power complex.

- Ministry of Finance issued the Document No. 1515339/BCT-TCDN signed on December 16, 2008 to submit to the Government for approval of credit guarantee for the project. Thereafter, the Government Office announced the Prime Minister’s decision for in-principle approval of loan guarantee for the project.

- The Prime Minister granted the in-principle approval in writing regarding the investment policy including the BOO on June 25, 2009.

- The investment owner completed payments of land use fees and issuance of land use right certificates (red books) in October 2011.

- Ministry of Planning and Investment, Ministry of Justice, the State Bank of Vietnam, Ministry of Industry and Trade, Ministry of Finance issued the written documents for affirmation of legal basis of the project and requested the Government to permit pilot implementation of the BOO program for Kien Luong power plant project.

Apartments for experts are ready to welcome...

2. Compensation and resettlement

The compensation and site clearance cause a big distress for the project implementation due to the local authority's policies: After finishing compensation and site clearance, the properties still had to be returned to the local people; therefore, about 500 tents were erected over one night in the saline land with newly purchased toilets posed on the muddy area! After a night, thousands of Heaven worship altars were created to require compensation…

Meanwhile, the local authority uses the compensation price in the remote and distant Kien Luong area even higher than in Ho Chi Minh City. Several local households had a harvest value less than 1 kg of fish raised the muddy pond to shrimps' cultivation up to hundreds of thousands of dollars of income. Nevertheless, TanTao Group was not discouraged and continued to implement compensation and clearance and relocated the project in the sea reclamation area to meet the project schedule..

3. About the construction and preparation of construction site

To date, Tan Tao Group has invested US$ 240 million in Kien Luong power project. The Group dredged dozens of million cubic meters of mud and filled up more than 88 ha for Kien Luong power plant project including 60 ha for the plant and auxiliary area, 10 ha for roads, technical system, electricity system, reservoir with capacity of 2500 m3 per day, box culverts, helicopter parking area, green park, resettlement area, office, expat apartment, worker’s apartment.

Especially, for completion of the plant site, we had to make steel pile walls of over 17 km offshore; the steel piles weighing from 5 tons to 64 tons each were driven for years in the sea and even a foreign professional we hired was carried away by sea wave.

Basically, the site of Kien Luong 1 thermal power plant has been completed since 2011 and ready to be handed over to the EPC contractor. Moreover, auxiliary works, office building, housing apartments have been completed since 2010. Nevertheless, the construction of the plan entirely depends on the negotiation of Ministry of Industry and Trade on GGU and PPA.

4. Financing

Financial institutions and the Sinosure insurance agency granted approval in writing on August 24, 2010 for insurance of loans for the Project and lenders have signed the written participating loan agreements. On May 13, 2011, we signed the minutes on agreement with the international credit institutions concerning loan terms (value, interests, fees, terms…) Therefore, the Board of Management of Tan Tao Group has completed the loan arrangement for the project long ago to be ready for implementation of the project, and only waiting for completion of the project’s legal procedures in accordance with the international standards to sign the loan agreement and have the loan capital disbursed.

5. Consultants and international bidding

Over the past 5 years, the investment owner has worked with the world's leading consultants to ensure the plant to use advanced technologies, perform environmental protection and ensure feasibility in finance arrangement during the financial crisis period. The international consultants of the Project include: The technical consultant Mott McDonald (UK), coal consultant - Marston (USA), Financial consultant - Standard Chartered (UK Bank), Fiscal & tax consultant - Delloitte (USA), Auditing company - KPMG (USA), Willis insurance firm (USA), Law firm consultant - Shearman & Sterling (USA), coal import consultant, management consultant - USGI, etc...

The international consultants has helped the investment owner to select advanced technologies at reasonable costs, and together to obtain feasible finance arrangement for the project

6. Unresolved existing issues

With so many hardships, shortage of materials, remote and isolated location, we have made extraordinary efforts to build a role model green power plant. I directly came to visit the site and even stayed at the site on the Lunar New Year holidays. Just for a few years, Tan Tao Group invested and hired, purchased materials, stones, etc… has transformed and prospered this local area which was very poor in 2007, the first day of visit when I started to study the site.

Before Tan Tao Group was granted this project, foreign investors had come to study the site for 7 years long and the project had stood still, no planning documents had ever been made. Only after a short time, with the help of 12 world’s leading consultants including technology consultant, port consultant, technology selection consultant, coal supply consultant, finance consultant, international bidding consultant, especially, hiring consultant to investigate the site to look for a possible area to construct the coal port, we have turned the project planning on papers into reality; before then, the planning of the Kien Luong thermal power plant almost went bankrupt due to the lack of a port.

It could be said: Whatever are in humanly possible maners, Tan Tao Group and I, we have provided.

In late 2010, the site was ready to be handed over to international contractors for starting construction.

Kien Luong thermal power project stood still there for three years and the construction could not begin despite we, as the owner, have tried the best and carried out the work as provided in the Appendix 1. However, we have to wait for the Ministry of Industry and Trade to hold negotiation talks on the GGU Agreement in accordance with the international standards of the BOO model (Build – Operate – Own). The required agreement is a must and the international contractors of Vietnam’s large-scale electricity projects such as Phu My, Mong Duong, etc.. have all obtained from the Vietnam’s Government.

The BOO model just has a precedent for domestic investors in construction of water supply plants in Vietnam, and hasn’t ever had any applied for construction of power plants. We had to spend so much time working with Ministries and I talked about this issue and personally when I was a National Assembly deputy, had spoken it out before the General Assembly’s meeting and the Prime Minister then required the Ministry of Industry and Trade to study and implement it.

Regarding the Kien Luong thermal power project: The related Ministries and departments granted written approval for GGU in the pilot BOO model for Kien Luong 1 power plant project.

Specifically, the Electricity of Vietnam issued the Document No. 218/EVN-TT dated January 20, 2012; the State Bank of Vietnam issued the Document No. 444/NHNN-QLNH dated February 1, 2012; the Ministry of Finance issued the Document 1582/BTC-TCDN dated February 10, 2012; the Ministry of Planning and Investment issued the Document No. 82/BKHDDT-GSTDDT dated March 7, 2012 and the Ministry of Justice issued the Document No. 1815/BTP- PLQT dated March 8, 2012, have all asserted: This is the first BOO project (Build - Operate – Own) in electricity sector, therefore, there haven’t any relevant detailed regulations in Vietnam’s law system. However, according to the regulation of Article 66 of the Investment Law, the establishment of GGU agreement is acceptable and all propose to the Prime Minister to adopt it as a pilot model.

On the basis of the consent and approval of Ministries and departments, the Ministry of Industry and Trade issued the Document No. 3713/BCT-TCNL dated May 2, 2012 to submit to the Prime Minister for resolution of the issues concerning Kien Luong 1 Project and requested the Prime Minister for pilot implementation of GGU agreement and BOO agreement for the Kien Luong 1 thermal power plant project.

According to the Ministry of Industry and Trade, The Government held two negotiations in August and November 2012 but could not reach any conclusion. Therefore, the Ministry of Industry and Trade couldn‘t hold negotiation on the GGU with us, although we hired international lawyers to make the draft GGU agreement and have sent several reminders to the Ministry of Industry and Trade. I directly met Minister Vu Huy Hoang to request the Ministry of Planning and Investment to have a specific negotiation schedule. The Minister promised, however, afterward all fall into silence. Our executives have come to the Ministry of Industry and Trade many times to remind, and the MOIT initially responded: We had to wait for the MOIT to perfect its organization and complete the establishment of its Energy Department and departments and then would hold the negotiation right afterwards. After a long period of delay, we requested and got the response "We can’t do anything in this political battle and must wait..

We have to accept the wait, meanwhile, for every passing day we have to bear more higher interests and live under the pressure of international contractors and partners.

Kien Giang Province held many meetings in which we reported and provided full clarification. In fact, we believe: On the legal basis, none of any authority can conclude we have violated the implementation of Kien Luong thermal power project.

Leaders and Permanent Members of the National Assembly can send a delegation to come and investigate the site to see our completed work and the immense waste due to the stagnant policy and mechanism that has caused heavy loss to the investor. To date, we have suffered a loss which could evaluate to more than US$ 80 million for payment of interests and dividends as the construction site stood still.

All of a sudden, from the reason of causing the delay of the power master plan VII and the adverse impact on economic development of the country and the loss to the Company, the Ministry of Industry and Trade held a meeting with Kien Giang Province’s authority and announced in the press and demanded the withdrawal of the project “due to the delay” and even the minimum is to work with us, at first, hasn't happened???

You should compare it with the projects of the EVN and PetroVietnam, Vietnam National Coal and Mineral Industries Group to see a clearer picture: Those are large State corporations, receiving money from the State budget and taking all advantages, nevertheless, the average delay period of each project is 5 to 7 years, even tens of years!

To name an example, the Pha Lai power project previously stood out as a prominent project, with the contract cost of US$ 524 million and the construction period of 4 years, however, the plant took 12 years to start its operation and cost more than US$ 800 and the plant has its well-known story: When the Government’s officials and ministries gathered at the launching ceremony of the plant, the plant could not start up, the plant’s leaders had the initiative of 'burning car tires creating smoke rising ' to fortify feelings of the plant in operation!

The foreign investment projects such as Mong Duong project were also stagnant for 7 years and international loans must comply with the international standards of which Tan Tao Group asks for the same adoption.

None of domestic and foreign investors’ projects have been deployed as quickly as ours, and at the beginning period, we have built parks, expat’s apartments, workers' apartments, etc... Only waiting for the Government and directly the Ministry of Industry and Trade to hold negotiations on the GGU and the PPA to start construction.

More than anyone else, all of you have a clear understanding of the deep cause of stagnancy of the national key power project.

In reality, throughout the two years, Tan Tao Group has suffered bitterness and injustice, to name a few:

- Vietnamese banks were actively seeking to provide loans to the Group and we have had an AAA+ credit rating for 17 years, unexpectedly, all the banks required us to pay the loans in 2011 and 2012. Even the five-year maturity loans were required to be paid off immediately. There is a fact: At the peak of anti-corruption and the Party rectification launched by the General Party Secretary, we have to suffer the horrible injustice of banks. Many banks told us the truth the State Bank’s Governor Binh called and forbid them to provide loans to us and require us to pay loans and cut our credit line…

- In addition, the banks such as Vietinbank lent us VND 520 billion and we had the remaining VND 186 billion outstanding debt and paid nearly VND 200 billion interest, nevertheless, the banks did not discharge part of our collateral worth more than VND 5600 billion in accordance with the Credit Law and purposely pushed us to the death

- The businesses associated with the Group and I provided advance money to the Group to pay bank loans in exchange for set-off shares. However, it took years for the State Securities Commission with a number of the documents not required by the law, even we received the response: "The issues related to ITA are very sensitive". It evidently demonstrates the Government’s agency has resolved issues not according to the applicable law, but depending on the "sensitivity strength"!

- Millions of ITA shares were traded every day, nevertheless, all staff of the Group have the feeling the news media and presses always stay ready to report inaccurate information about the Group, Tan Tao University to deliberately demolish ITA share price.

- Concerning Kien Luong power project, groups of strangers intruded into the park to chop trees and hit guards at least 4 times. After trees and the park were destroyed, we grew them again and brought large trees from the Group's nursery garden to replace, and they continued to be destroyed. Someone is intentionally trying to destroy the project???

After being dismissed from the National Assembly, I went abroad for medical treatment. Only a few months later, my staff was kidnapped and was forced to call the office and tell the lie that she could not go to work for feeling sick and to tell her family she was going on a business trip for the University. Then after the work time, 10 persons in plain clothes took her to the University to obtain my personal documents.

On September 6, 2012, we received the Order of arrest and detention for “Infringement upon rights and interests of other persons! A female staff about 1.5 m high, weighing over 40 kg was savagely tortured, and her family was threatened not to hire a lawyer. She was detained and deadly raped 3 times; at the third time, she was taken to the Tu Du hospital for first aid because she was forced to admit the fake documents proving that I am the owner of Quanlambao blog!

Since then, dozens of staff of the Group was stopped and threatened on the road by persons in plain clothes to make them panic and leave the Group. Even IT staffs, employees and the elder guard of Tan Tao University were summoned to the investigation agency and the police….

As a Vietnam’s leading corporation in creating jobs, turning the saline and alkaline land into a green industrial parks, one of which was recognized as “the world's most beautiful industrial park” by the Chairman of the Japan Investment Association”. The Group takes the lead in paying taxes, attracting foreign investments and being engaged in building the culture of charity activities in Vietnam for nearly 20 years. The Group’s Tan Tao University is the most outstanding university in Vietnam with dozens of important researches which have been published on the world’s renowned magazines while many Vietnam’s universities haven't had any similar research for a decade. The university doesn’t charge tuition fees and grants full scholarships to talented but poor students and Hoa Trang Nguyen Prize students. As a private corporation, we have been granted many titles: the Labor Medal, Emulation flags and Certificate of Merit of the Government, etc...

However, for the last two years, Tan Tao Group and Tan Tao University have been ill-treated, libeled and pushed to death! Will there any other businesses enduring unfair treatments like the majority of non-state businesses in Vietnam?

Most of private businesses wonder if “is there any progressive country where private businesses accounting for 50% GDP are illy and unfairly treated as such?”

Tan Tao Group still survives because our business operations are good and have contributed effectively to the socio-economic development of the country along with our sacrifice, while other Vietnamese businesses have brought their money abroad we have used almost all private funds and assets to save the company from being taken over.

According to the family's tradition: When the ship carrying weapons was besieged by the French force, my uncle as the captain ordered all sailorsand Political commissar to leave the ship, only my uncle stayed and burned down the ship not to let the French take possession of the weapons.

At present, our generation navigating our ships in the market is being encircled, not by the ennemies, but by the acquirers who are destroying the economy and the trust of our people.

The words of Minister Vu Huy Hoang lead to the question: Are they, the groups of godfathers who are continuously taking over Vietnamese businesses including our company, receiving the backing of the Vietnam’s Government?.

I believe the answer is clear to all of you and most of Vietnamese people.

My uncle sacrificed his life for his patriotism. Our generation is facing with a hidden enemy: Corruption and monopolization are backed by the political forces who have placed their private interests above the National interest and evidently, these activities have seriously violated the human rights for everyone living, working and doing business and being protected according to the law.

The statements of the Ministry of Industry and Trade have caused dissatisfaction to international investors and contractors who have collaborated with us to devote their work and finance to the project. The request for withdrawal of Kien Luong power project can seriously damage the prestige and foreign investment attraction into Vietnam and cause the loss of foreign investors’ declining confidence in the Vietnam’s Government and makes it worse in the eye of the world.

The statements of the Ministry of Industry and Trade have turned its responsibility into the reason for withdrawal of the project which confirms to the international investors the situation:

Vietnam is infringing its own Law from kidnapping, violently torturing its people to, for no reason, withdrawing the project, even though the faults are from the Ministries and their departments, Vietnam has reached the alarming situation. Consequently, hundreds of thousand of businesses have suffered losses and have been taken over during only one year.

What Tan Tao Group endures is the real evidence of coercion, injustice, illegal management in the Vietnam’s business and investment environment.

The Prime Minister directly told me at least three times: “Tan Tao Group is a large group and should look for a land area in Hanoi to build an office building to meet the scale…” I responded to the Prime Minister: “I would thank the Prime Minister for consideration, but we cannot go everywhere to beg for… Tan Tao Group wishes to carry out challenging projects which can’t be done by anyone but benefit our people…”

Therefore, all you should understand our view, if the Government can find better investors, for the sake of the country, we are willing to hand over the project. We suggest the assessment of our investments and damages are to be fairly evaluated and transparently to pay us the compensaton in accordance with the Vietnamese and international law.

Respectfully./.

APPENDIX 1

SUMMARY OF IMPLEMENTATION OF KIEN LUONG POWER COMPLEX

(Enclosed with the Document No. 423/CV-TTG.2013