VIETNAM continues to focus on renewable energy and transport sectors for infrastructure development in the country. There has been a noticeable secondary market activity with multiple assets changing hands as international investors look to finance projects which have passed on from development stage. Due to rapid development of renewable energy, projects are increasingly facing curtailment issues and the government intends to shift focus on strengthening of transmission grids for the country.
Read the key developments in Infrastructure and PPPs in the country in our latest insight.
AES TO SELL STAKE IN VIETNAMESE COAL POWER PLANT
AES Corporation has agreed to sell its entire 51% stake in Vietnam's 1.24 GW Mong Duong 2 coal-fired power plant to a consortium led by an undisclosed US-based investor. AES owns a 51% equity interest in Mong Duong 2, Posco Energy Company Limited owns 30% and Stable Investment Corporation, a subsidiary of China Investment Corporation, owns the remaining 19%.
The power producer and distributor signed a deal for the sale of its interest in the plant. The buyers are unknown and the deal is expected to close either late 2021 or early 2022 subject to regulatory approvals.
The company is developing the 450 trillion British thermal units (TBTU) Son My LNG terminal in Vietnam in partnership with PetroVietnam (PVN). It is also developing the 2.25 GW Son My 2 combined cycle gas power plant in the Southeast Asian country.
The Mong Duong 2 power plant was completed in 2015 and sells power to state-owned utility Vietnam Electricity (EVN) under a 25-year power purchase agreement (PPA). It has a coal supply agreement with state-owned Vinacomin until 2040.
HO CHI MINH CITY FLAGS INTEREST IN TRANSPORT PPPs
Vietnam’s Ho Chi Minh City will aim to attract private funding to develop new development plan which will run through 2030.
The projects will be funded through several methods, including official development assistance and public-private partnerships. The government will aim to draw funding from domestic and foreign enterprises.
The projects to be developed include the Belt Road 3 project, four expressways, the Cat Lai and Can Gio bridges, urban railways, inland waterway ports and dry ports, as well as the expansion and building of interprovincial bus stations and freight stations.
Vietnam approved a new PPP law in 2020 in order to boost foreign investment in public-private partnerships, including transportation projects.
FRENCH FIRM TO DEVELOP USD 1.2BN VIETNAMESE WIND PROJECT
French renewables company Qair has partnered with a Vietnamese firm to develop a VND 28trn (USD 1.2bn) wind project in Vietnam. A subsidiary of Qair - formerly known as Lucia Group - has partnered with Dong Tam Group Joint Stock Company to develop the project.
The development, which is located in central Quang Binh province, was approved by the local government. The province is looking for private investment on 62 projects, with a focus on agriculture, industry, energy, tourism, and infrastructure development
Some of the projects include the development of a USD 4bn gas-fired power plant with a capacity of 3 GW in Hon La Economic Zone, the USD 155m third phase of the Le Thuy 3 wind power plant, and the development of a USD 172m industrial zone in Phu Thuy and Mai Thuy communes.
CHINA ENERGY PLANS 2 GW VIETNAM COAL POWER PROJECT
China Energy Engineering Company (CEEC) is expanding its Vietnam coal-power portfolio with a plan to develop a new 2.12 GW project along with a Malaysian partner. The company signed a framework investment and development agreement on 22 January with Malaysia’s Toyo Ventures for the Song Hau 2 Thermal Power Plant in the southern Vietnamese province of Hau Giang.
A legal-binding agreement with more co-investment details will be finalised within eight months, while the estimated investment of the project, as approved by the government, is estimated at USD 3.24bn.
Toyo Ventures’s wholly-owned subsidiary, Toyo Ink Group Bhd - which specialises in making printing ink and other materials - in 2007 submitted a proposal to the Vietnamese government to develop a power plant in a suitable province.
The Malaysian firm then proposed the Song Hau project, which will be developed in the build-own-transfer mode, It will cover about 117ha and will be located at the Phu Huu A commune, in Chau Thanh district of Hau Giang - about 200km from Ho Chi Minh city. China Energy and Toyo Ventures will later conduct due diligence, with an intention to cooperate in all stages including equity investment, construction as well as operation of the project.
SUMITOMO AGREES TO JOIN SMART CITY ALLIANCE
Japanese trading house Sumitomo has agreed to work together on smart cities with Hiroshima University and authorities in Higashihiroshima city .
Sumitomo and the state-run university will establish a laboratory for research and development of local 5G network services inside an international exchange center building, which will be constructed in the autumn of 2021 in the university campus in Higashihiroshima city.
Sumitomo will utilise data and knowhow gained from the tie-up for use in its USD 4.2bn smart city project on the outskirts of Hanoi in Vietnam. The project, being carried out with Vietnamese real estate developer BRG Group, will use 5G and facial recognition, among other cutting-edge technologies. This project was earlier announced in October 2019.
TOYOTA TSUSHO BUYS STAKE IN VIETNAM HYDROPOWER PROJECT
Japanese trading house Toyota Tsusho has made an equity investment in an 84MW hydroelectric power project in Vietnam.
The company has obtained a 35% stake in Northern Electricity Development & Investment Joint Stock Company No. 2 (NEDI2), the operator of Ngoi Phat Hydropower Plant, from Vietnam Construction and Import-Export Joint Stock Corporation (VINACONEX).
As a result of the transaction, NEDI2 is now owned 38% by VINACONEX and 27% by individual shareholders.
Toyota Tsusho is expecting to build a partnership with VINACONEX and will study the possibility to expand the scope of renewable business activities in Vietnam.
Toyota Tsusho positions its renewables investments as one of its growth businesses, which has so far grown to exceed 3.4 GW in total power generation capacity. It is strong in wind power, but has been diversifying into other renewables such as geothermal and biomass.
KOREA'S EXIM BANK TO FUND VIETNAM RAIL PPP STUDY
The Export-Import Bank of Korea (KEXIM) has offered to fund the feasibility study for Phase 2 of Metro Line 5 in Vietnam's Ho Chi Minh City, which will be developed using a public-private partnership. The local government is negotiating with the Korean lender .
KEXIM said it will provide funding to update the project’s pre-feasibility study, including technical, financial and legal aspects. The project, which was previously set to be financed using official development assistance, has been transformed into a PPP.
The 23.3km Metro Line 5 will be developed in two phases. The first, with an 8.8km extension, will connect the Bay Hien intersection to Sai Gon Bridge and is set to cost USD 1.6bn. It has received official development assistance from the Spanish government, the Asian Development Bank, the European Investment Bank and the German development bank KfW.
Phase 2 is about 14.5km long and will connect Bay Hien crossroad with the Can Giuoc bus station.
KUMAGAI GUMI BUYS STAKE IN 49.5 MW VIETNAM SOLAR FARM
Japanese contractor Kumagai Gumi has acquired a 30% stake in a 49.5 MW solar project in Vietnam.
The target, Binh Dinh TTP Energy & High Technology (BDE), owns and operates the Cat Hiep Solar Farm in Binh Dinh province. The purchase is in line with Kumagai Gumi’s mid-term business plan released in March 2018, in which the company said it would put greater emphasis on renewable energy.
The project was developed by France's QAIR International and Vietnam’s Truong Thanh Vietnam Group JSC (TTVN). The solar farm has been operating since June 2019 and sells power to the Vietnam Electricity Co. under a 20-year contract.
TOTAL SOLAR LOOKS TO SELL 50% OF SOUTHEAST ASIA ASSETS
French energy major Total's rooftop solar unit in Southeast Asia is looking to sell an equity stake of about 50%.
The unit - Total Solar Distributed Generation - is courting prospective investors and has identified at least three preferred bidders. The company owns a rooftop solar portfolio of between 70 MW and 100 MW in the region.
The group also operates in the renewable energy sector through Paris-based Total Eren, which owns more than 3.3 GW of renewables globally. Total Eren aims to have an installed capacity of more than 5 GW by the end of 2022.
METRO PACIFIC SEEKS INVESTMENT PARTNERS FOR TOLL ROADS
Philippines toll road operator Metro Pacific Tollways Corporation (MPTC) is seeking to partner with local companies to invest in toll roads across Southeast Asia. The company will focus on acquiring assets in Vietnam and Indonesia , where it already has a presence,
MPTC has not yet identified new investment targets, adding that previous ticket sizes in the region ranged from USD 150m to USD 200m.
The company announced in February 2021 that it was planning to sell its stake in Bangkok’s Don Muang Tollways, which operates a 21.9km toll road in the Thai capital. The 24.9% stake was priced at USD 149m.
The company decided to sell its share of the toll road after it saw increased interest in the asset and redeploying the proceeds in new projects will help the company grow more in the long-term.
Philippines-listed infrastructure conglomerate Metro Pacific Investments Corporation is the parent company of MPTC.
TENAGA INVESTS IN FIVE VIETNAMESE PROJECTS
Malaysian state-controlled IPP Tenaga Nasional Berhad (TNB) has agreed to invest in five Vietnam rooftop solar projects majority owned by Singapore's Sunseap.Tenaga has agreed to buy a 39% stake in the 21.6 MW projects and the partners plan for this to be the start of a long-term relationship.
the two companies announced that they would work together on importing 100 MW(ac) of renewable power into Singapore in a two-year trial, starting at the end of this year.Following the completion of the purchase, Sunseap will own 51% of the projects and Vietnam's Sun Times Energy will continue to own 10%.
The projects were completed at the end of 2020 and have a 20-year power purchase agreement under Vietnam Electricity's (EVN) Feed-in-Tariff 2 programme, selling power into the grid at a rate of USD0.0838/kWh.
VIETNAM FLAGS USD 33BN INVESTMENT TO DEVELOP POWER GRID
Vietnam's government told that it will need to invest a total of USD 33bn between 2021 and 2030 to further develop the country's power grid.
Authorities will encourage state-owned utility Vietnam Electricity (EVN) to mobilize capital out of which , Up to USD 14.7bn will be invested in the transmission grid, while the remaining will be used to develop the distribution system. The estimate is part of the country’s draft Power Development Plan VIII (PDP VIII), which aims to develop the energy sector from 2021-2030. Vietnam plans to use the PPP model to attract private investment into power grid projects
Tenders for projects that were not included in the previous development plan will not start until PDP VIII is officially approved by the government. Private investment has been involved in only one grid project so far.
Vietnam’s renewables sector has experienced rapid growth in recent years, boosted by attractive feed-in-tariff schemes for the wind and solar sectors. The country's solar power capacity was approximately 16.5 GW at the end of 2020 after a construction surge in rooftop solar projects in the second half of 2020.The growth in renewables has led to an oversupply of power to the grid and curtailment issues, and the government plans to reduce its total renewable energy output by 1.3 billion kWh in the year 2021.
MASDAR, ADNOC SIGN DEVELOPMENT MOUs WITH PETRONAS
Masdar and Abu Dhabi National Oil Company (ADNOC) have signed a memorandum of understanding (MoU) with Malaysia's national oil and gas company Petronas to explore renewable energy and oil & gas developments, respectively.
Masdar announced it has signed an MoU to collaborate with Petronas on ground-mounted solar projects and offshore wind opportunities in Malaysia, Vietnam, and Taiwan.
Petronas has also signed a deal with ADNOC to explore opportunities in the oil and gas sector, which will see the two collaborate on exploration, development, and production of Abu Dhabi’s resources.
ADNOC and Petronas' MoU also covers the downstream O&G sector in Abu Dhabi, with an agreement to collaborate on supply of crude and the offtake of refined products.
IFC CONSIDERS LENDING TO 55 MW VIETNAM WIND PROJECTS
International Finance Corporation (IFC) is planning to lend USD 60m to a Vietnamese renewable energy developer Thuan Binh Wind Power to finance the latter's two wind power projects in the country with a combined capacity of 55 MW.
List of key transactions - Vietnam Q12021
Source: Inframation, YOG INFRA analysis
ABOUT YOG INFRA
YOG INFRA is an infrastructure focused financial advisory firm committed to support sustainable economic growth driven through infrastructure development. With global offices in Singapore and India, we work with Development Finance Institutions (DFIs), Private Sector and Government Agencies.
©2021 YOG INFRA. All rights reserved.