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Infrastructure & PPPs in Vietnam - Q4 2021 Update

VIETNAM, the last quarter of 2021, has seen increased PPP activity in transport sector - notably in roads, ports and airports. Three (3) airport development and expansion PPP projects are under development. In the renewable value chain, power transmission is being planned under PPP mode besides solar & wind generation projects.

Read the key developments in Infrastructure and PPPs in Vietnam in our latest insight.

 

October 2021

YCH TO DEVELOP USD 200M VIETNAM DRY PORT

Singapore-based logistic company YCH Group and Vietnamese conglomerate T&T Group have started building a USD 200Mn dry port and logistics hub in Vietnam. Vietnam SuperPort, the largest logistics infrastructure project by a Singaporean company in Vietnam, will be located in the Vinh Phuc ICD Logistics Centre, to the north west of Hanoi city.

The facility will be built in two phases with the first likely to be ready in the last quarter of 2022 while the second will be completed by 2025. The project will be financed through a mix of debt and equity, the developers are in discussions with domestic and international lenders for the debt.

The 83ha Vietnam SuperPort will be designed for a cargo capacity of about 850,000 twenty-foot equivalent units (TEU). As a multi modal logistics hub with an integrated dry port, the development will have an advanced supply chain system. The facility will be a supply hub for manufacturing in Vinh Phuc province, and a key connecting node for global and regional trade and supply chains between China, Vietnam, Southeast Asia and other regional and international markets.


VIETNAM’S CAPITAL CITY PLANS TO BUILD SECOND AIRPORT

Authorities in Vietnam's capital of Hanoi have proposed a second international airport amid plans to expand the city over the next 20 years.

The facility will help increase the city's air passenger capacity to 150 million per year. The current airport can handle 100 million people a year. The Ministry of Transportation, Vietnam will build eight new airports at a cost of approximately VND 365trn (USD 16Bn) between 2020 and 2030.

Funds will be mobilized from different sources including official development assistance loans, state budgets, commercial loans from financial institutions and public-private partnerships. Currently, the country has 22 airports in operation, including nine international and 13 domestics. Vietnam aims to have 26 airports by 2030.


VIETNAM APPROVES USD 307M AIRPORT PPP PROJECT

Vietnam has approved the development of a VND 7trn (USD 307Mn) airport - to be located near its border with China - as a public-private partnership. The greenfield Sa Pa Airport in Lao Cai province will occupy 371ha and will be built in two phases.

The initial phase will involve a cost of VND 4.2trn, with the airport having an annual capacity of 1.5 million passengers. The VND 2.8trn second stage will double capacity and will be implemented after 2028. The concessionaire will invest VND 4.2trn in the project, while the rest will come from the government. The PPP will include a 50-year concession, with a four-year period for construction.


SOL ENERGY LAUNCHES VIETNAM ROOFTOP SOLAR GENERATION JV

Japan's Sojitz Corporation’s joint venture with Osaka Gas is tying up with Looop Inc. to work on rooftop solar power projects that will serve industrial and commercial customers in Vietnam. The new joint venture - SOL Energy - will utilize financial support from the Ministry of the Environment of Japan’s Financing Programme for JCM Model Projects in FY2021 and will be conducted in cooperation with the Vietnamese and Japanese governments.

SOL Energy plans to install rooftop solar panels that can provide over 10 MW of solar power to customers in southern Vietnam’s Dong Nai Province.


VIETNAM SEEKS PROPOSALS FOR PLASTIC WASTE RECYCLING PROJECT

The Asian Development Bank (ADB) has sought expressions of interest (EoI) from advisers to study plastic waste management in the country's secondary cities. The successful firm will identify the suitable technology for plastic waste management in Vinh Yen in Vinh Phuc province, Hue in central Vietnam and Ha Giang in the far northern region - and prepare a roadmap to scale up the plan for other urban areas across Vietnam.

The project will build a new wastewater treatment system, upgrade drainage pipelines and systems, dredge the Dam Vac Lake and create infrastructure for waste management in Vietnam. The Manila-based ADB has agreed to provide USD 170Mn as debt for the overall project and also manage more than USD 14Mn technical assistance with Vietnam's Ministry of Natural Resources and Environment.


VIETNAM PLANS PPP FOR USD 4BN HANOI ROAD

Vietnam's Ministry of Planning and Investment is reviewing a pre-feasibility study to build a 111km ring road linking the country's capital Hanoi with the provinces of Hung Yen and Bac Ninh. The project will also be submitted to the government and the National Assembly for approval.

The project will require a total estimated investment of VND 94.1trn (USD 4Bn). The state budget will allocate VND 31.9trn, while the local government will contribute VND 33.5trn. Private investors will have to provide the rest.

The six-lane road will start at Thanh Xuan commune in Hanoi's Soc Son district, and end in Que Vo district, in Bac Ninh province. The route will help reduce traffic congestion in the capital city.

VIETNAM CLEARS MARUBENI-BACKED LNG POWER PROJECT

Vietnam has approved the development of a VND 47.4trn (USD 2Bn) LNG-to-power project in the northern part of the country by a consortium including Japan's Tokyo Gas and Marubeni. The Quang Ninh provincial government issued an investment permit to the group, which also includes state-owned PetroVietnam Power Corporation (PV Power) and Vietnam Mechanism and Erection Joint Stock Company.

The 1,500 MW facility will be developed on a 60ha site in Cam Pha City and is slated to reach commercial stage in 2026.The investors aim to start construction in 2023.

Vietnam is currently developing several LNG-fired projects as it moves away from coal-fired power plants. PV Power has appointed local banks to arrange the financing of a USD 1.4Bn gas-to-power facility, while US-based AES Corp also announced a joint venture with PetroVietnam Gas to develop an LNG terminal to feed two plants totaling 4.4 GW in Binh Thuan province.


November 2021

VIETNAM END ITS OFFER OF A FIXED WIND POWER FEED-IN TARIFF (FIT)

Vietnam has stick to its plan to end its offer of a fixed wind power feed-in tariff (FiT), despite calls from developers to extend it due to coronavirus-induced delays on their projects. Vietnam was looking to more than double its power generation capacity over the next decade with a focus on renewable energy. In 2018 it set the FiT at 8.5 cents/kWh for wind energy projects that could become operational before Nov 2021.

The Ministry of Industry and Trade will switch to a new mechanism to set the wind power prices through bidding processes.


THAILAND'S BGRIMM TO DEVELOP 48 MW VIETNAM WIND PROJECT

Thai power developer B Grimm Power will develop a 48 MW wind power project in a northern-central province of Vietnam. BGrimm owns 80% equity in the project while local Vietnamese company Huong Hoa Holding will own the remaining stake in the wind development.

The project is estimated to cost USD 95Mn and is set to start operations in December 2022, the project will be financed through 70% debt. The wind power development - called Huong Hoa project - is located in the Huong Hoa district of Quang Tri province in Vietnam. It will sell power to the Vietnam national utility Electricity of Vietnam (EVN) through a long-term power purchase agreement (PPA).

Bangkok-listed BGrimm is seeking to grow its renewables business in various countries in Southeast Asia. The company owns a total installed capacity of 2.8 GW, including 737 MW of renewable power, as of August, and is currently developing power projects in Thailand, Laos, Vietnam, and Cambodia.


VIETNAM PLANS DA NANG PORT PPP NEXT YEAR

Vietnam’s Da Nang City is planning to tender the VND 4trn (USD 176Mn) Lien Chieu Port project next year. The concessionaire will be chosen using a public-private partnership (PPP) scheme.

Local real estate company BRG Group and Japan’s Sumitomo Group have submitted investment proposals for the new port facility, as well as for several other infrastructure developments in Da Nang. In addition to the VND 4trn private investment, the Vietnamese government will spend about VND 3.4trn to create the breakwater and other basic infrastructure.

The development involves the construction of two berths designed to receive cargo ships with capacities of 100,000 tonnes deadweight. Vietnam is seeking to attract private investment to develop its VND 313trn master plan for the port sector in the current decade. The seaport in central Da Nang city is one of six clusters chosen for development.


ASIAN SOLAR DEVELOPER NEFIN TARGETS ENTRY INTO VIETNAM

Hong Kong-headquartered Asian solar developer NEFIN plans to break into the Vietnam market within the coming months, with a target to achieve 1 GW for its entire Asia Pacific portfolio by 2025. The company - which has developed commercial and industrial distributed solar in countries such as Malaysia and Thailand with a focus on multinational corporation clients such as Intel - is also eyeing growth in Taiwan, Indonesia, the Philippines, and other markets.

The Hong Kong-based developer is looking into acquisitions of brownfield as well as ready-to-build assets amid increasing consolidation that is seeing some players exit the Southeast Asian solar market. It will consider asset sales on a case-by-case basis provided the pricing is suitable and the divestments can reduce the cost of capital.


December 2021

SOUTHERN GRID UNIT PLANS TRANSMISSION CONNECTIVITY PROJECTS IN SOUTHEAST ASIA

Southern Grid Yunnan International is looking to build high-voltage power transmission line projects in Southeast Asia. The company - a unit of state-run power giant Southern Grid - is looking particularly at the Greater Mekong River Delta region, especially Vietnam, Laos, and Myanmar. It is seeking to collaborate with domestic and international companies for project investment, construction, operations, and management.

Apart from upgrades to higher voltage lines, Southern Grid Yunnan International wants to win contracts to expand existing power transmission lines to more interior areas.


SEMBCORP ESTABLISHES PARTNERSHIP FOR 1.5 GW VIETNAM RENEWABLES PROJECTS

Singapore-based Sembcorp Industries and Vietnamese renewables company BCG Energy have partnered to develop up to 1.5 GW of clean power projects in Vietnam. The duo will initially set up a 550 MW portfolio of nearshore and onshore wind plants in the Ca Mau, Tra Vinh and Soc Trang provinces. The first phase of the collaboration will involve an initial funding of USD 30Mn by Sembcorp.

The biggest project is a 300 MW plant in Ca Mau followed by 150 MW in Soc Trang and 50 MW in Tra Vinh, these projects are already under construction. The projects are expected to start operations by the end of 2022.


VIETNAM’S NEW USD 260M AIRPORT PPP LURES INVESTORS

Vietnam has approved a project to build an airport in the central province of Quang Tri via a public–private partnership (PPP) with a total investment of VND 5.82trn (USD 260Mn). The airport is intended to address the increasing local demand for civil air transport and support the national defence of the central Vietnam region.

A few investors have already shown interest in the project, including Hanoi-based FLC Group which owns Bamboo Airways, Vietjet Air, a Thailand investor, and port-to-agricultural conglomerate T&T Group. T&T Group is one of the interested bidders that has submitted an expression of interest to conduct a project feasibility study. The terminal will be built in two phases covering parts of the Gio Linh districts of Gio Quang, Gio Hai and Gio Mai.

It is designed to accommodate about 2.2 million passengers a year by 2046 and handle about 5,600 tonnes of cargo a year by 2042. The first phase of the project will involve the construction of the basic facilities of a civil airport and a military airport in line with the International Civil Aviation Organization standards. The cost will be an estimated VND 2.91trn. The project investment for the first phase includes VND 2.69trn expected to be contributed by the private sector as equity and VND 2.3trn as bank loans. The government will earmark VND 233Bn for land acquisition and resettlement.

In the second phase, the government and the private investor will team up to invest in the infrastructure of ground service areas at the airport. It will expand the passenger terminal in 2047 to increase the capacity to up to 5 million passengers a year and will also expand the first cargo terminal with a target capacity of 13,700 tonnes a year by 2043. By 2059, the cargo capacity will hit 25,500 tonnes a year. The investment for the second phase is estimated at VND 2.9trn, including VND 79.7Bn from the state budget. The project will have a concession period of 50 years, while the operation and payback periods are 47 years, and 4 months, respectively.

 

List of key transactions - Vietnam Q4 2021


List of upcoming projects - Vietnam Q4 2021



Source: Inframation, YOG INFRA analysis

 

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