Newsletter
Vietnam Infrastructure Spotlight - February 2020
Freshfields' Vietnam Infrastructure Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive either our Vietnam M&A Spotlight or our Vietnam Law Competition Spotlight.
SIGNIFICANT LEGAL MOVEMENTS IN 2019
Power master plan
The Prime Minister requested the Ministry of Industry and Trade (MoIT) to formulate the master plan for energy and power development in the 2021-2030 period to deal with the potential power shortages. The deadline for completing the power development master plan 8 is June 2020. While master plans 6 and 7 relied heavily on traditional power sources such as hydropower, thermal power and gas, master plan 8 will be the electricity plan of the renewable energy era. Source: Icon
PPP draft law
Amid expectations among investors, the draft of the Law on Public-Private Partnership released by the Ministry of Planning and Investment (MPI) has come out with some positive changes, pinning high hopes on a bankable legal framework for future projects. Source: Vietnam Investment Review
Direct power purchase agreements
Vietnam is gathering opinions on direct power purchase agreements. The MoIT and the US Embassy introduced a proposal for a Direct Power Purchase Agreement (DPPA) in Vietnam. This new policy is expected to allow businesses in Vietnam to procure electricity directly from private firms producing renewable energy and enable them to power their operations with 100 per cent renewable energy. Source: Vietnam News
REVIEW OF KEY INFRASTRUCTURE PROJECTS IN VIETNAM IN 2019
Power
According to the MoIT, Vietnam is likely to face an electricity shortage of 6.6 billion kilowatt-hours (kWh) in 2021 and 11.8 billion kWh in 2022, which can increase to 15 billion kWh in 2023. The reason for the shortage was that many power projects are falling behind schedule, especially in southern provinces which may lack some 3.7 billion kWh of power in 2021 and up to 10 billion kWh one year later. Source: The Saigon Times
Below is a brief overview of the status of BOT power projects in Vietnam:
- BOT power projects that are in commercial operation:
- the 1,200MW Mong Duong 2 project – Quang Ninh province – developed by AES Corporation, POSCO Power, and China Investment Corporation;
- the coal-fired Vinh Tan 1 project – Binh Thuan province – developed by China Southern Grid;
- the Phu My project is the largest in Vietnam, comprising a series of power plants with a combined capacity of up to 3,900MW. The complex includes the Phu My 2-2 and the Phu My 3 BOT projects. - BOT power projects that are under construction:
- the 1,200MW Duyen Hai 2 coal-fired BOT Power Project developed by Malaysian Teknik Janakuasa Group – Chinese finance;
- the 1,200MW Hai Duong coal-fired BOT Power Project – developed by Malaysia’s Jaks Resources Bhd and China Power Engineering Consulting Group (CPECC) – Chinese finance;
- the 1,320MW coal-fired Van Phong 1 BOT Power Project developed by Sumitomo Corporation – JBIC as lead financier; co-financiers are SMBC, MUFG, Mizuho, Sumitomo Mitsui Trust Bank, OCBC, DBS, and the Bank of China;
- the Nghi Son 2 coal-fired BOT Power Project developed by Marubeni Corporation and Korea Electric Power Corporation (KEPCO) – JBIC as lead financier; co-financiers are KEXIM, SMBC, MUFG, Mizuho, Shinsei Bank, OCBC, DBS, and Maybank. - BOT Power Projects that are in an advanced stage of negotiation:
- the 1,200MW Nam Dinh 1 BOT Power Project developed by Saudi Arabia-based ACWA Power and South Korea-based Taekwang Power;
- the 2,000MW Song Hau 2 coal-fired BOT Power Plant developed by Malaysia-based Toyo;
- the 1,200MW Vung Ang 2 coal-fired BOT Power Project developed by One Energy;
- the 1,980MW coal-fired Vinh Tan 3 BOT Power Project developed by OneEnergy, EVN, and Pacific Group Corporation. - BOT power projects that are under negotiation:
- the 1,320MW Quang Tri 1 coal-fired power plant being developed by EGAT;
- the 750MW Dung Quat 2 CCGT power plant being developed by Sembcorp; - BOT power projects that are on the way:
- AES signed an MOU with the MoIT to implement the 2,200MW Son My 2 CCGT project in Binh Thuan province and obtained approval to develop the Son My LNG Terminal;
- EDF was appointed leader of the consortium set up to develop the Son My 1 CCGT along with Pacific Corporation and two Japanese partners, Sojitz and Kyushu Electric Power Co.
- IPP:
- The Prime Minister approved Vietracimex and Marubeni as the investors of O Mon II Power Project in IPP form. The O Mon 2 project will have a capacity of 1,050MW and is expected to be put into operations in 2022-2023.
Renewable energy
- Auctions solar power. After months of uncertainty over the policy, the next round of purchase prices in solar power may be set through auction instead of pre-established feed-in tariffs as before. Source: Vietnam Investment Review
- IFC - renewable energy projects in Vietnam. IFC has invested US$75 million in green bonds issued by AC Energy, which cooperated with BIM Group to provide the company with funds for wind and solar power projects in Vietnam. AC Energy invested VND7 trillion in a complex of three solar power plants with combined capacity of 330MW in Ninh Thuan Province. This complex was connected to the national power grid in April 2019. Source: PV Magazine
- Sustainable Smart Energy Solutions. Sembcorp joined hands with Becamex and VSIP to bring sustainable smart energy solutions to Vietnam. The tripartite partnership will see a range of energy and utilities solutions such as renewable energy, waste-to-energy, wastewater treatment and water recycling brought to VSIP’s various integrated townships and industrial parks as well as other Becamex-owned industrial parks and facilities in Vietnam. Source: Sembcorp
- Dau Tieng Solar Power Complex. In September 2019, a US$391m solar power farm, Dau Tieng Solar Power Complex, south-east Asia’s biggest, began operations in Tay Ninh, southern Vietnam. This is a 420MW solar power project developed by a joint venture between Xuan Cau and Thai conglomerate B.Grimm. Source: Vn Express
- Solar farm in Ninh Thuan. Sunseap and InfraCo Asia completed a 168MW solar plant in Vietnam. Singapore-based clean energy firm Sunseap International and partner InfraCo Asia have commissioned a 168MW solar farm in Ninh Thuan province. The plant was completed ahead of schedule and in time to receive FiT of 9.35 US cents per unit. Source: PV Tech
- World giants get green light for US$12 billion wind power project in Vietnam. Singapore-based Enterprize Energy Pte. Ltd has been awarded a site survey license for an offshore wind power project costing an estimated US$11.9 billion in Vietnam’s central province of Binh Thuan. Source: The Leader
Airports/Aviation
- Lawmakers approve US$4.8 billion first phase of Long Thanh Airport. The National Assembly (NA) gave the go-ahead to the government picking an investor for the first phase of the Long Thanh Airport. The Government expressed its preference for using the state-owned Airports Corporation of Vietnam. However, the NA has demanded that the investor uses its own funds and that the government not provide a guarantee. Source: Vn Express
Oil and gas
- Blue Whale gas project. An Exxon Mobil Corp. oil and gas project off the coast of Vietnam is becoming a test of Beijing’s growing power in the South China Sea. Vietnam’s foreign ministry sought to shoot down rampant speculation that Exxon will sell its 64% stake in the country’s largest offshore energy project Ca Voi Xanh, or Blue Whale. Source: Bloomberg
- Thi Vai LNG terminal. PetroVietnam Gas Corporation (PV GAS) and its partners plan to start construction of the Thi Vai LNG terminal in southern Vietnam later this month. It will have a capacity of 1 million mt/year in its first phase in 2022, which will be raised to 3 million mt/year by 2023. Source: Vn Express
- Proposed Bac Lieu LNG plant. The MoIT supports inclusion of a 3,200MW LNG-fired power plant in the Mekong Delta province of Bac Lieu as part of the national power plan. However, it expressed concerns that the investor, Singapore-based Delta Offshore Energy, has proposed a selling price that is too low at 7 U.S. cents per kWh. Source: Vn Express
- South-west Vietnam gas fields. Jadestone Energy has formally submitted the field development plan (FDP) for its Nam Du and U Minh gas fields to Vietnam Oil and Gas Group (PetroVietnam), targeting the first production in late 2021. Source: Offshore Technology
- Gazprom approved to develop 340MW gas-to-power plant in Quang Tri. Gazprom EP International B.V, a subsidiary of Gazprom Group – Russia’s largest natural gas producer – has been approved in principle by the prime minister to develop a gas-to-power plant as proposed by the MoIT and the MPI. Source: Vietnam Investment Review
Mineral
- Blackstone Minerals to buy 90% stake in Vietnamese nickel project. Blackstone Minerals has entered a binding term sheet for the exclusive option to acquire a 90 per cent stake in the Ta Khoa nickel project, 160km west of Hanoi in Son La Province of Vietnam. Source: Mining Technology
