EPC Model: Initial Steps to EPC Position of Vinaconex

Engineering, procurement and construction (EPC), which debuted in Vietnam around five years ago, is a business form that brings in huge benefits for a nation. Especially, it helps domestic enterprises to have a new thought and longer vision to become powerful units and take the master of all activities.

 

Experts said the EPC business form creates the start-up drive for the formation of heavy industrial groups for project management, technical design, technology and equipment manufacturing. Mitsubishi (Japan), Siemens (Germany) and Hyundai (South Korea) have experienced EPC contractors which have taken over both domestic and international projects. Arguably, EPC contractors play crucial roles in the initial international economic integration process as in Vietnam and in the speedup of the national industrialisation and modernisation.

 

In fact, construction firms like Lilama Corp, Song Da Corp and Vinaconex Corp are showing up their roles of EPC contractors in construction projects, especially hydropower plant projects.

 

Started with the EPC contractor role, Vinaconex used its 19-year experience in working with world-leading foreign firms like Sumitomo, Taisei and LG. Vinaconex has secured its firm EPC position and made increasing contributions to the State Budget, with VND225 billion (US$14 million in 2006, up 15.6 per cent on year. Currently, subcontractors for Vinaconex are large Vietnamese corporations. Foreign experts are working in national key projects like Cua Dat hydropower plant and Cam Pha cement factory. So far, Vinaconex has fulfilled its role as EPC contractor for country’s key irrigation and hydropower projects such as water reservoirs and turbines for Cua Dat, Buon Kuop and Buon Tua Shar hydropower plants. Remarkably, Vinaconex redirected the current of the Krongno River to build Buon Tua Shar hydropower in January 2006 or redirected the current of the Chu River to build Cua Dat irrigation and hydroelectric works in December 2006. At the same time, the sooner completion of underground works for Buon Ta Shar power plant in August 2006 and Buon Kuop 2 power plant on December 15, 2006 has affirmed the position and capacity of Vinaconex in the role of EPC contractor for key hydropower projects.

 

Although this EPC contract form brings in huge benefits, the mechanism for the development of this form still has huge shortcomings. The EPC contractor remains quite new in Vietnam. Thus, it needs clear regulations and policies for the development. Mr Nguyen Thanh Phuong, deputy general director of Vinaconex, said “To make EPC contract model effective, the Party and the Government should reach a consensus that an industrialised nation cannot lack heavy industrial groups and needs flexibly market-oriented contract signing and implantation mechanisms.” This is one of the most effective ways to prevent wastefulness.