Download James Dowd, Amol Kasbekar, Mark King, Michael

“Mini Nuclear Reactors in Vietnam”
The Babcock & Wilcox Company (B&W)
James Dowd, Amol Kasbekar, Mark King, Michael Strosnider, & Tim Yee
STRT 571 - International Business Environment – Final Project
Monday, May 3, 2010
The Foreign Direct Investment (FDI) in Vietnam
“…aggressively expand its reach overseas, both to meet corporate growth
goals and to diversify its customer base to produce more consistent and
predictable financial performance” (Summer 2009 Explore, 2009) - B&W CEO
Brandon Bethards
Objective
Market seeking / Horizontal Growth
Location
Vietnam
Regulations
FDI – < 49% in domestic operations and no land ownership
Nuclear – March 2010 MoU Agreement between US & Vietnam
Agreement
JV with PetroVietnam - Design, build, operation, and transfer of
nuclear power plant (Build, operate, transfer agreement)
Timing
Target construction date 2015, with 2018 start-up.
Technology
B&W mPower Reactor Technology - small-scale modular reactor
•Self-contained pressure vessel limits construction,
transportation, & installation costs
•Delivers 125 MWe per reactor (up to 750MWe)
•5 year run length, 60 year plant life
•Next generation clean energy - no CO2 emissions
The Vietnam Power Market
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Actual demand for electricity grew 15% per annum during 1995 – 2005
Demand forecasted to grow 17-20% per year during 2007 – 2015
Government objective to diversify sources of power generation
Commitment to open competitive market electricity market by 2022
Vietnam Electricity Production and Sales Forecast
Source: Sixth Master Plan –
EVN, November 2007
The Risks
FREE CAPITAL FLOW
Vietnam is Export Market Oriented
• Weak Currency
• Stable Exchange Rates
But Vietnam Attempts to
Influence Interest Rates
FIXED EXCHANGE RATES
Political / Regulatory
• Devaluating currency
Economic
•
– Goal 1% a year
– 20% during 2005-2010
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•
•
•
Government Stability
Expropriation Risk
Corruption
Nuclear Regulations
NO MONETARY POLICY
Regulated price of
power in Dong
•
•
•
Moving to retail
market: ↑ Prices
Price of Uranium in $
Competition from other
countries/ companies
•
But large demand
Technological
• New technology
• Nuclear supply
• Nuclear disposal
• Substitutes – Wind,
solar, hydro
• Transmission line
infrastructure
The Recommendation -
Let’s Do It!
• Consistent with corporate strategy
and objectives
– International presence – SE Asia
– Market seeking
• Growing economic market
– Increasing demand for power
– Movement towards clean energy
and decline of oil/gas resources
• B&W mPOWERTM reactor
appropriate for Vietnam
– Flexibility in power generation
– Minimizes capital infrastructure
and labor demand
• Rewards outweigh risks
– Political stability
– Assumed credible commitment
to open markets and devaluation