The central province of Quang Ngai may hand over a multi-billion dollar steel project to a local company after its foreign investors made an exit due to financial reasons, local media reported Wednesday.
Hoa Phat Group's plan to take over the Guang Lian steel mill in Dung Quat Economic Zone came a few months after its Taiwanese investors informed local authorities that they could not fund the project, which has been stalled since it was licensed in 2006.
Hoa Phat, one of Vietnam's biggest steel producers, will invest $2-2.5 billion in the project, news website Saigon Times Online reported.
According to the group's proposal, the plant will cover an area of 300-350 hectares and can produce 4 million tons of steel a year.
Hoa Phat wants to enjoy similar tax breaks the authorities previously granted to the foreign investors, including a low corporate income tax rate of 10 percent for 30 years, instead of 20-25 percent.
The steel project was initially proposed by Taiwanese-owned Tycoons Vietnam Co., Ltd with a cost estimate of over $1 billion, aiming to produce five million tons of steel a year.
Soon after that E-United Group, a steel conglomerate also from Taiwan, jumped in, increasing the factory's investment to $3.3 billion, without changing its designed output.
E-United contributed 90 percent of the projected cost and the rest from Tycoons.
In 2011, the investors asked for permission to raise both the cost and capacity of the factory, but authorities rejected the request, saying the investors failed to prove that they could provide enough funding.
The next year Japan's JEF Steel Corp. showed interest in the project, but backed out after studying its feasibility for two years.
After that, E-United proposed to cut the project's investment to $2 billion. But, in June this year it told the provincial authorities that it could not fund the project.
By then local authorities had already spent at least VND223 billion ($10.21 million) on compensation to residents relocated for the project, and so far have cleared two-thirds of the site, local media reported.
The investors have spent an estimated $42 million building initial structures for the construction, according to the reports.