Central Vietnam LNG power project struggles to attract investors despite strategic importance

The $2.2 billion Nghi Son LNG power project, once envisioned as a cornerstone of the north-central province of Thanh Hoa's energy future, is facing mounting challenges in securing an investor after two failed bidding rounds, forcing authorities to launch a third tender.

The project, a key component of Vietnam’s adjusted Power Development Plan VIII set to be completed in the 2025-2030 period, has yet to attract a firm commitment despite strong initial interest from both domestic and international energy companies, according to Tran Chi Thanh, deputy head of the Management Board of the Nghi Son Economic Zone and Industrial Parks of Thanh Hoa.

Repeated delays in investor selection

Authorities first put the project out to tender in July 2024, but the process was suspended to incorporate changes under the 2023 Bidding Law and related regulations.

A second round in April 2025 drew attention from major players including Japan’s JERA, Thailand’s Gulf Energy, South Korea’s SK Innovation, and several Vietnamese consortiums. However, no investor ultimately submitted a formal bid, prompting Thanh Hoa province to cancel the tender in July 2025.

In February 2026, the management board issued bidding documents for a third time, with submissions due in April.

Thanh said that the competitive bidding process is intended to ensure transparency and identify a financially and technically capable investor. Yet the lack of follow-through highlights deeper structural challenges.

Clearing the path for a mega project

According to Thanh, the Nghi Son LNG power plant is classified as a national priority energy project, with a planned capacity of 1,500 MW and a total investment exceeding VND57.5 trillion ($2.2 billion).

The project will use combined-cycle gas turbine technology with a capacity of 1,500 MW, alongside an LNG import terminal, a roughly 1 km breakwater, LNG storage tanks with a capacity of about 230,000 cubic meters, regasification facilities of 1.2 million tons per year, gas pipelines, a 500-kilovolt transmission system, and related auxiliary infrastructure.

In addition, the project will include 500kV power transmission lines and other supporting facilities.

Local authorities view the project as critical to strengthening energy security in Vietnam’s north-central region, while boosting industrial growth in the Nghi Son Economic Zone and contributing significantly to local state budget revenue.

SK Innovation, one of the interested investors, previously estimated the project could contribute nearly VND80 trillion ($3.04 billion) to the state coffers over its lifetime.

Policy uncertainty deters investors

Industry experts point to unresolved issues in Vietnam’s regulatory framework as the main barrier to investment.

Foremost among these is the absence of a power purchase agreement (PPA) mechanism. Investors in large-scale LNG projects require clear terms on electricity pricing, output commitments, and risk-sharing mechanisms - all of which remain uncertain.

“The absence of a stable PPA framework makes it difficult to secure financing and assess long-term returns,” one energy analyst said.

Electricity pricing presents another challenge. LNG-based power is highly sensitive to global fuel price fluctuations, while Vietnam’s retail electricity prices remain tightly regulated. This mismatch complicates negotiations between investors and off-takers.

“If prices are too low, projects are not financially viable. If they are too high, they risk burdening consumers and the broader economy,” the analyst added.

In addition to pricing concerns, investors must navigate a complex and often overlapping regulatory environment.

Unlike conventional power plants, LNG power projects involve multiple components, including terminals for LNG imports, storage, and regasification, each subject to separate approval processes across land use, environmental compliance, construction and energy regulations.

This complexity increases both costs and project timelines, further dampening investor appetite.

A test case for Vietnam’s LNG ambitions

The difficulties facing Nghi Son underscore broader challenges in Vietnam’s push to develop LNG infrastructure as part of its energy transition.

While demand for cleaner and more flexible power sources is rising, experts say attracting large-scale investment will depend on creating a more predictable and investor-friendly policy framework.

Until key bottlenecks, particularly around PPAs, pricing mechanisms and regulatory procedures, are removed, capital inflows into billion-dollar LNG power projects are likely to remain constrained.

For now, the outcome of Nghi Son’s third bidding round will serve as a critical test of whether Vietnam can translate policy ambition into bankable energy projects.