This article first appeared in The Edge Financial Daily, on March 29, 2016.

HANOI: Infrastructure firm Jaks Resources Bhd expects its US$1.87 billion (RM7.49 billion) power plant project in Vietnam to break even in eight years, generating an internal rate of return of 12%.

The build-operate-transfer power plant project is spearheaded by Jaks Hai Duong Power Co Ltd’s (JHDP), which is wholly-owned by Jaks Pacific Power Ltd, a 50:50 joint venture (JV) between Jaks and China Power Engineering Consulting Group Co Ltd (CPECC).

Jaks had roped in CPECC to jointly build and run the power plant last July. The project comes under a 25-year concession.

Speaking to reporters after the groundbreaking ceremony here on Sunday, Jaks chief executive officer Andy Ang Lam Poh said the 2x600mw coal-fired thermal power plant is expected to be completed in 2020, but hopes to expedite plans.

“We are confident that we can complete [the power plant] within the time frame,” he said, adding that sufficient funding has been put in place to enable construction to be completed on time.

It was previously reported that the recurring income from the project could be more than US$150 million a year. The power plant is Jaks’ first foray into the Vietnamese power generation industry.

Ang said the group was keen to venture into Vietnam’s power industry as it saw good opportunities in a country with a population close to 100 million and at an average age of less than 30 years old.

He added that during the construction period, Jaks will recognise a total of US$454 million in revenue from the engineering, procurement and construction contract, where the contribution is expected to start coming in in the first half of 2016.

To recap, in June 2011, JHDP signed a contract with Vietnam’s Ministry of Planning and Investment to undertake the design, engineering, construction and operation of a power plant in Hai Duong Province for a 25-year period. It was scheduled to be fired up by 2018.

Jaks initially partnered Wuhan Kaidi Electric Power Engineering Co Ltd for the project, with the Chinese party taking a 40% stake in it. However, Kaidi reportedly pulled out of the JV in 2013 due to financial constraints.

Jaks currently has an outstanding order book of RM2.7 billion and unbilled sales of RM300 million.

In the financial year ended Dec 31, 2015, Jaks’ net profit almost tripled to RM41.56 million from RM13.97 million, despite an 8% decline in revenue to RM449.44 million from RM491.14 million.