Bussiness News

Cavico Corp. (NASDAQ: CAVO), a leading infrastructure development company based in Vietnam, today announced that its subsidiary, Cavico Vietnam, on March 31, 2010, received an investment license for the formation of Cavico Renewable Energy Joint Stock Company, or Cavico CRE. Cavico CRE’s main business will focus on developing renewable energy-related projects such as hydroelectric, wind power, solar energy, and biofuels.  

“Cavico believes that our focus on renewable energy is a strategic move in the right direction for the Company”

Cavico CRE requires a total investment of $14 million. An initial investment of $4.2 million will be contributed within 90 days after receiving the investment license. The remaining $10 million will be contributed within three years following the initial start-up.

According the share structure, Cavico Vietnam will own 10%, or 2,400,000 shares and Cavico Transport, a subsidiary of Cavico Vietnam, will own 20%, or 4,800,000 shares of Cavico CRE. The founding partners plan to offer the remaining shares of Cavico CRE to outside investors.

“Cavico believes that our focus on renewable energy is a strategic move in the right direction for the Company,” comments Mr. Hai Thanh Tran, Cavico’s vice president. “We will continue to build upon our market-leading position with traditional engineering, construction and infrastructure projects, as well as invest in some select real estate projects, we believe that we can leverage our expertise and apply these skills towards building our renewable energy capabilities. We believe this will help us to broaden our investment opportunities and improve our future profit margins. Cavico CRE’s first project will be with the Cau Dat wind power plant, located in Lam Dong province.”

Currently, there are about twenty-five investors registered for licenses to build windpower plants, for up to 1000 MW, in the highlands of Vietnam, such as Binh Thuan, Ninh Thuan, and Lam Dong provinces. There is a 15 MW plant currently in operation in this highland region and Cavico Transport is the second enterprise that was issued a Windpower Investment License by Lam Dong People’s Committee.

According to studies conducted by World Bank, Vietnam has the potential for 513,360 MW of windpower. Furthermore, according to the study, 8.6% of Vietnam’s land is considered “good” or “very good’ for windpower, while the land in Thailand, Laos and Cambodia only has a favorable rating of 0.2%, 2.9%, and 0.2% respectively.

In 2009, Vietnam’s power supply grew at an average rate of 13% per year, while the country’s GDP grew at about 6.5%. In August 2009, the Office of the Prime Minister issued a government decree requesting governmental offices on all levels to provide incentives and support in the development of renewable energy projects. According to another government decree, domestic as well as foreign renewable energy investors will be given incentives such as reduced taxes, licenses for land usage, and credit lines to develop renewable energy. Vietnam’s Deputy Minister of Industry and Trade, Nguyen Thanh Bien has publicly stated that renewable energy is an important part of Vietnam’s sustainable development plan and Vietnam aims to generate 3% in 2010, 5% in 2020, and 11% in 2050, of its electric power from renewable energy sources.