This article first appeared in The Edge Malaysia Weekly on July 8, 2024 - July 14, 2024

Toyo Ventures Holdings Bhd (KL:TOYOVEN) was close to starting the construction of a 2.13gw thermal power plant in Vietnam when it received a termination notice from the Vietnamese government last Thursday.

The notice came as a surprise because Toyo Ventures had just completed the financial close for the Song Hau 2 Thermal Power plant for US$2.67 billion (RM12.5 billion) on June 28, marking a major step forward for the company.

In the notice, the Ministry of Trade and Industry stated that the termination was a result of Toyo Ventures’ failure to complete the financial close for the power plant within the 90-day notice period. It did not state when the notice period ended. Nevertheless, the reason for terminating a huge contract just because of failure to meet the financial close within a stipulated period is baffling.

The power plant was mooted in 2007 and a concession agreement signed only in 2020. Toyo Ventures had initially roped in a contractor from China and completed the financial close in 2022, but the Vietnamese government did not recognise the deal with the China party.

Toyo Ventures returned to the drawing board and managed to get Malaysia Export and Import Bank to lead a consortium of 10 banks to finance the power plant. The construction contract was awarded to a joint venture between Sunway Construction group Bhd (KL:SUNCON) and Vietnam’s Power Engineering Consulting Joint Stock Company 2.

Toyo Ventures had even signed a transmission of power agreement with a Vietnamese agency. Everything seemed to have fallen into place until the sudden letter of termination.

Why the termination after Toyo Ventures had already obtained the financial close? Perhaps there is more to it than meets the eye.

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