In 2010, the information that Petro Vietnam, the national oil and gas group, planned to build a unique building in Vietnam with the expected capital of one billion dollars, the biggest ever real estate project in Vietnam, stirred up the public.
Of course, the mammoth project caught the special attention of the public, because the building was expected to have 102 stories. Meanwhile, the project’s investor – PetroVietnam – has been well known for its powerful financial capability. Dinh La Thang, the then Chair of Petro Vietnam, once took pride when witnessing the signing ceremony on the cooperation for the development of PVN Tower two years ago.
Therefore, the decision to give up the project has also surprised many people.
Explaining the decision, Petro Vietnam said that it needs to withdraw capital from some projects, especially the projects in non-core business fields, in order to gather strength on the oil and gas sector – its main business field.
However, people still think that there are some more reasons behind the decision.
In fact, at the time when Petro Vietnam announced the plan on the highest building in Vietnam, some experts expressed their doubts about the feasibility of the project, for two reasons: the building was overly high, while the project required too big capital.
At the time when the project was announced, there were some earthquakes which caused the shaking and the collapse of houses in the world. Therefore, geology experts once expressed their worries about the height and the safety of the project.
Several months later, in early May 2010, after the signing ceremony of the cooperation between Ocean Group and PVC, who represents Petro Vietnam in PVN Tower project, the worries about the capital arrangement for the project had been lifted. Therefore, people believed that the project would be implemented in accordance with the plan initially set by investors.
After the important signing ceremony, a lot of other events took place, which showed that the project on the 102 story building had been going as planned. The investor released the detailed plan for the project implementation, showed the place of the project, and sought architects for the project.
And suddenly, Petro Vietnam announced the withdrawal from the project because of the instruction of the Prime Minister.
Some people think that Petro Vietnam gives up the project simply because it has to obey the instruction by the Prime Minister, who has recently requested big economic groups to withdraw capital from non-core business fields.
Meanwhile, others believe that Petro Vietnam has given up the plan because it has realized the risks of the project. Especially, prior to that, after some geologists warned about the weak stratum in Hanoi, Petro Vietnam once decided to cut down the number of the stories of the project, from 102 to 79 stories.
Meanwhile, finance experts do not think that the problem lies in the geological problems, but in the profitability of the project. Petro Vietnam might hope to make fat profits in developing the project. However, it might have rethought about that.
The real estate market, after the golden age in early 2008, has been falling, while a lot of real estate developers have tasted the bitterness because their products cannot be sold or leased.
Most recently, PVL, a subsidiary of Petro Vietnam, had to bargain away its apartments to get back money to pay bank debts.
“If the real estate market was still hot as in some years ago, Petro Vietnam would not give up the project on the golden land area,” a real expert commented.
Source: TBKTVN
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