VIETNAM continues to notify a strong pipeline of PPP projects in traditional transport & energy sectors; along with large secondary market transactions. There is focus also now on securing financing for PPPs through support from large multilateral banks like ADB, AIIB and via capital markets (through bond issuances).
Read the key developments in Infrastructure and PPPs in Vietnam in our Q3 2022 insight.
July 2022
VIETNAM APPROVES PPP MODE FOR EXPRESSWAY CONNECTING NORTHERN PROVINCES
Vietnam will develop an expressway that connects three northern provinces of the country using a PPP contract. The country’s Deputy Prime Minister Le Van Thanh has appointed Thai Binh Provincial People's Committee as the procurement agency to implement the Ninh Binh-Nam Dinh-Thai Binh BOT Project.
Ninh Binh, Nam Dinh and Thai Binh are provinces in northern Vietnam with large seaports and international airports. According to Vietnam’s road network plan for 2021-2030, the Ninh Binh-Nam Dinh-Thai Binh expressway has a total length of 109 km, with four lanes invested in the period before 2030.
In the past, Hanoi-based property-to-trading conglomerate Geleximco Group had sent a document to the Ministry of Transport to express an interest in investing in the Ninh Binh - Nam Dinh - Thai Binh expressway. It also requested to prepare a pre-feasibility study on the road.
VIETNAM’S HO CHI MINH CITY PLANNING EXPRESSWAY PPP
Vietnam’s Ho Chi Minh City is planning to expand the Trung Luong Expressway through the public-private partnership mode. The local transportation department has called for requisite approvals from the relevant ministries and localities.
The 62 km, four-lane expressway opened to traffic in 2010, and passes through Ho Chi Minh City and the provinces of LongAn and Tien Giang. The department is looking to expand the highway to eight lanes in a bid to reduce traffic congestion.
VIETNAM PLANS PPP FOR NEW AIRPORT POLICE HEADQUARTERS
Vietnam’s southern Dong Nai province will develop a headquarter complex for the police, a medical facility and an animal quarantine area for Long Thanh International Airport in the PPP mode. The Prime Minister and other authorities have approved a decision to build the projects with the provincial budget and funding from the private sector.
Dong Nai has handed nearly 2,380 ha of land, accounting for about 94% of the requirement, to the developer of Long Thanh airport. The Airports Corporation will have to raise about VND 98 Trn (USD 4.18 Bn) for the project, and it has already secured VND 36.6 Trn.
The group is speaking with 12 domestic and international organisations to take on the rest at an interest rate of 5%-5.5% with 15-year tenures. The first phase is set to be completed by 2025, when the new airport will be able to handle 25 Mn passengers a year. The next two stages will be built from 2030 to 2035, and from 2040 to 2050, respectively. Once completed, it will have an annual capacity of 100 Mn passengers and five million tons of cargo.
VIETNAM’S EVN FINANCE ISSUES USD 75 Mn GREEN BONDS
Vietnam’s EVN Finance Joint Stock Company (EVN Finance) has issued VND 1.7 Trn (USD 75 Mn) in green bonds partially guaranteed by Private Infrastructure Development Group-backed GuarantCo.
The transaction is Vietnam’s inaugural onshore, local currency, internationally verified green bond, it is also the first-ever partially guaranteed corporate bond that has attracted institutional investors, such as Manulife and AIA, to the country.
Vietcom bank Securities acted as the mandated lead arranger on the transaction. Non-bank financial institution EVN Finance will use the proceeds to issue longer-term loans to finance capital expenditure of green infrastructure in the Southeast Asian nation, including loans for the rooftop and ground-mounted solar sub-sectors.
GuarantCo, which provided a VND 1.15 Trn partial credit guarantee, worked alongside the inter-governmental international development agency Global Green Growth Institute (GGGI). GGGI provided technical assistance in structuring the green bond and assisted in the third-party verification of the bond framework.
VIETNAM PLANS CHINA LINK IN PPP EXPRESSWAY PROJECT
The Vietnamese government is consulting on a new highway route as part of its VND 20.9 Trn (USD 896 Mn) Dong Dang-TraLinh expressway to facilitate trade. The road will connect the Lach Huyen international port in the northern city of Hai Phong and Trung Khanh district of CaoBang province with the Xinjiang Uyghur Autonomous Region of China, Khorgos of Kazakhstan, and European countries.
Construction of the project, in the public-private partnership mode, will be carried out in two phases, with the first from 2020 to 2024 on a 93 km stretch from the Tan Thanh border gate to Quang Hoa District in Cao Bang at a cost of VND 12.5 Trn. The remaining 22 km will be built after 2025.
VIETNAM APPROVES USD 350 Mn RAILWAY RESTORATION PROJECT AS PPP
Vietnam's Ministry of Transport will allow a private investor to conduct a feasibility study and rebuild the defunct Da Lat-Thap Cham Railway line, using a public-private partnership (PPP) model. Hospitality and travel services operator Bach Dang Hotel Complex Trading will finance the project and must submit an investment proposal to the ministry.
In 2018, the leisure group proposed to restore the abandoned railway line at an estimated cost of more than VND 8.2 Trn (USD 350 Mn). The line will start from the Thap Cham station and end at Da Lat, and will be built based on the old railway line, with a length of 84 km. Da Lat is the capital of Lam Dong province and the largest city by size in the Central Highlands region in Vietnam. The North-South Railway is the main rail line connecting Ho Chi Minh City to Hanoi.
HO CHI MINH CITY PLANS PPPS FOR INFRASTRUCTURE INVESTMENT
Vietnam’s Ho Chi Minh City is planning public-private partnerships (PPPs) to attract investment in infrastructure. The local government plans to improve rules on investment through the build-own-operate, build-operate-transfer, and build-transfer (BT) routes under a 2021 law on PPP.
The PPP model is particularly useful for the country’s largest city, given a capital shortage in infrastructure investment amid pressure of public debt and limited state revenues. The city currently has 22 projects in the PPP model, with a total investment of VND 64 Trn (USD 2.74 Bn), including 11 completed projects, largely in the transportation sector.
VIETNAM APPROVES PPP MODEL FOR NA SAN AIRPORT
Vietnam’s Ministry of Transport has approved a proposal by Son La province’s People’s Committee to seek private investors to build Na San Airport, following the withdrawal of Airports Corporation of Vietnam (ACV).
The Son La province will allocate about VND 300 Bn (USD 13 Mn) from its budget to improve project viability and attract investors. A master plan for the 2021-2030 period projects the Na San Airport to have an annual capacity of about one million passengers by the end of the decade.
The ACV wants to prioritize resources to implement key projects including the first phase of Long Thanh Airport, the T3 terminal at Tan Son Nhat International Airport and the T2 terminal at Phu Bai Airport. Other projects it wants to prioritise include the expansion of the Noi Bai T2 terminal, the Dien Bien airport, as well as a terminal and apron at Cat Bi airport.
August 2022
NORTHWEST VIETNAM PLANS USD 340 Mn AIRPORT PPP
Vietnam's north western province of Lai Chau is looking to develop an airport project in the PPP mode and has sent an implementation report to the country's prime minister for approval. The airport - which will be a civilian and military facility - will handle 500,000 passengers a year and cover 167 ha. It will carry an investment of about VND 8 Trn (USD 340 Mn). It will be located in Tan Uyen district, east of the province’s capital.
Lai Chau is a mountainous province that shares a 265 km border with China. It is linked with Hanoi via National Highway 32. The provincial government has been handling site clearance to attract private investors.
The Lai Chau Provincial People's Committee will likely be the procurement agency. Vietnam currently has 22 civilian airports, including 10 international hubs. There is so far only one airport in Vietnam’s northwest region, the Dien Bien Airport.
JERA TO INVEST IN VIETNAMESE RENEWABLES COMPANY
Japan's JERA has signed an agreement with the International Finance Corporation and Armstrong S.E. Asia Clean Energy Fund to acquire all their equity interests in Vietnamese renewable energy power company Gia Lai Electricity Joint Stock Company (GEC).
The company owns and operates mainly hydro, solar and wind power projects with a capacity of approximately 600 MW, including projects under construction. GEC aims to expand its power generation assets to 1.7 GW by 2025, comprising mainly solar and wind power.
AIIB PROPOSES LAOS WIND POWER PROJECT
The Asian Infrastructure Investment Bank (AIIB) has proposed the development, construction, and operation of an approximately 600 MW wind generation facility, an associated 500 kV substation, and a 500 kV transmission line in the Lao provinces of Sekong and Attapeu. The electricity is likely to be sold to Vietnam Electricity (EVN). The objective of the project is to increase electricity supply to Vietnam by supporting a cross-border electricity trade and assisting Lao’s diversification of its energy mix.
The project will be co-financed with the Asian Development Bank (ADB) as a lead co-financier. Its environmental and social risks and impacts have been assessed in accordance with the ADB’s Safeguard Policy Statement.
PETROVIETNAM SEEKS OFFSHORE POWER AND HYDROGEN PARTNERSHIP WITH EQUINOR
Vietnam Oil and Gas Group (Petro Vietnam) is looking to partner with Norwegian energy firm Equinor to implement offshore wind power and hydrogen production projects in the Southeast Asian country. Officials from both companies said they hoped the partnership will cover more areas in clean energy, especially hydrogen production from offshore wind power.
Petro Vietnam Technical Services Corporation is looking at opportunities to invest in and develop offshore renewable energy projects in Vietnam.
VIETNAM EXPRESSWAY SECTION TO BE OFFERED AS PPP
Vietnam plans to build a section of a USD 2 Bn expressway in the southern part of the country via a public-private partnership model. The cost of the project and timeframe for the bidding process have not been decided yet.
The 130 km project will be built in two sections - the first will connect Can Tho city to Bac Lieu province and will be built by the Vietnamese government, while the second from Bac Lieu to Ca Mau will be built in the PPP model. Both will allow speeds of up to 100 km/h and construction will take place between 2021 and 2025.
September 2022
ADB LAUNCHES PARTNERSHIP STRATEGY FOR VIETNAM
The Asian Development Bank (ADB) has launched a new partnership strategy for Vietnam aimed at boosting private investment. Between 2023 and 2026, the Manila-based lender will support the country to review its framework to achieve net zero carbon emissions by 2050. It will also partner with the government to explore solutions to develop carbon markets and green finance, and to accelerate investments in sustainable infrastructure projects.
ADB will help advance state-owned enterprise reforms using a combination of non-sovereign loans and technical assistance to boost private sector-led growth, and also help operationalize Vietnam’s new public–private partnership law
CHINA NUCLEAR ENGINEERING PLANS 50 MW VIETNAM SOLAR INVESTMENT
China Nuclear Engineering & Construction Corporation (CNECC) is planning to invest in a 50 MW utility-scale solar farm in Vietnam. CNEEC will invest through its arm China Zhongyuan Engineering, which is looking to hire technical and financial advisors.
The target asset started operations in 2020 and is located in Bình Định province. It sells electricity to the state grid. China Zhongyuan is looking to benefit from a feed-in tariff scheme in Vietnam, a country which is seen as having a stable business environment. China National Nuclear Power's renewables unit, CNNP Rich Energy is also evaluating an acquisition of a 100 MW onshore wind farm.
VIETNAM CLEARS US INVESTOR FOR EXPRESSWAY PROJECT
The Department of Planning and Investment of Ho Chi Minh City in Vietnam has approved PHI Group as an investor in the Ho Chi Minh City-Moc Bai Expressway project.
The 50 Km project is planned as a public-private partnership in the build, operate, transfer model. The development cost is estimated to be USD 700 Mn in the first phase, which did not specify details of the other stages. Of the amount required for the first phase, the Ho Chi Minh City and Tay Ninh provincial governments will contribute about 44% with investors responsible for raising the remaining 56%.
The project is expected to reduce congestion on the existing National Route 22, as well as help in the socio-economic development of Ho Chi Minh City and the Southern Focal Economic Zone.
VIETNAM PLANS USD 1.3 BN AIRPORT PPP
Kon Tum province in Vietnam's Central Highlands region is planning to develop an airport on the outskirts of Mang Den town in a public-private partnership.
The development of Mang Den airport is expected to cost VND 4 Trn (USD 1.68 Bn). Mang Den Airport will be a Grade 4E civil airport, occupying about 350 hectares. The design capacity is between 3 Mn and 5 Mn passengers annually. Construction is scheduled between 2023 and 2027.
Kon Tum is a mountainous border province, located at the junction of Indochina, which comprises Cambodia, Laos, Myanmar, Thailand, and Vietnam. It is adjacent to a key economic region and is connected to a highway corridor known as the East-West Economic Corridor (EWEC).
Vietnam's Deputy Prime Minister requested the host provinces to quickly select investors for the construction of four airport projects in Sa Pa, Quang Tri, Lai Chau, and Phan Thiet so that work could start late this year or early next year.
GOVERNMENT OF VIETNAM NEEDS USD 14 BN IN POWER INVESTMENTS TILL 2030
The Government of Vietnam will require annual investment between USD 8 Bn and USD 14 Bln till 2030 to develop new power plants and expand the country’s grid capacity, Out of the total amount required, 75 per cent will be used to finance the construction of new power plants, with priority given to renewable energy (RE) facilities. The remaining 25 per cent will be used to finance grid expansion. The country is currently seeking private investments for its upcoming power projects.
The Government of Vietnam plans to increase the total installed power generation capacity to 121 GW by 2030 from 76.6 GW at the end of 2021. This will be further increased to 284 GW by 2045. The government has also announced that no new coal projects will be approved.
List of Key Transactions - Q3 2022
Source: Inframation, YOG INFRA analysis
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