Japan pulls out of Vietnam nuclear project, complicating Hanoi's power plans​

Hanoi: Japan has dropped out of plans to build a major nuclear power plant in Vietnam because the time frame is too tight, Japanese ambassador Naoki Ito told Reuters, potentially complicating Vietnam's long-term strategy to avoid new power shortages. Vietnam, home to large manufacturing operations for multinationals including Samsung and Apple, has faced major power blackouts as demand from its huge industrial sector and expanding middle class often outpaces supplies, strained by increasingly frequent extreme weather, such as droughts and typhoons. "The Japanese side is not in a position to implement the Ninh Thuan 2 project," the ambassador to Vietnam said, referring to a plant with a planned capacity of 2 to 3.2 gigawatts. The project is part of Vietnam's strategy to boost power generation capacity.

Ninh Thuan 2 is scheduled to come online by 2035 alongside Ninh Thuan 1, a plant with the same capacity, according to the government's roadmap. Vietnam wants to increase electricity production from multiple sources, mostly renewables and gas, but projects have faced delays and uncertainty over regulatory and pricing issues. The announcement comes amid strains in usually close ties between Hanoi and Tokyo, including from a planned ban on petrol motorbikes in central Hanoi that has angered market-dominating Honda. A letter about the issue from Japan's embassy to Vietnamese authorities in September has still not been formally answered, Ito said, though he said that Vietnamese authorities might organise further consultations on the matter.

Russia, Japan were original partners

Work on both nuclear plants in central Vietnam started in the early 2010s but was halted in 2016 when Hanoi suspended its nuclear power programme over safety and budget concerns. Russia had been awarded the Ninh Thuan 1 project, and Japan the second plant.

After it resumed its nuclear energy programme last year, Vietnam asked Japan and Russia to implement the projects, Ito said, but that after meetings with Vietnamese officials, Japan decided in November that it would pull out as the deadline for completion was too close.

Under the current timeline, Vietnam was expected to sign agreements with its international partners in September for Ninh Thuan 1 and in December for the second plant.

Vietnam's industry ministry and state-owned energy firm Petrovietnam, which is the Vietnamese partner for Ninh Thuan 2, did not respond to requests for comment.

A Vietnamese official said no agreement had yet been signed for Ninh Thuan 1 either.

The Russian embassy in Vietnam and its Vietnamese partner for Ninh Thuan 1, state-owned grid operator EVN, did not comment.

Japanese companies expressed little interest in the Vietnam project because they were focused on rebuilding skilled workforces disrupted by the Fukushima accident in 2011 that led to the temporary shutdown of Japan's nuclear power plants, said one person familiar with the discussions. They declined to be named as the information was not public.

The ambassador said Japan was still exploring options for additional plants in Vietnam at a later stage, especially small modular reactors.

French, South Korean and U.S. investors have expressed interest in the Ninh Thuan plants, multiple Vietnamese and foreign officials said.