FDI firms in Vietnam concerned about losses if FIT rates are recalculated

By Minh Hue
Mon, March 31, 2025 | 8:00 am GMT+7

A possible reduction in the feed-in-tariff (FIT) has raised concerns among foreign solar power investors about the risk of losing their capital and exiting the Vietnamese market.

A solar power farm developed by Trungnam Group in Ninh Thuan province, south-central Vietnam. Photo courtesy of the government's news portal.

A solar power farm developed by Trungnam Group in Ninh Thuan province, south-central Vietnam. Photo courtesy of the government's news portal.

A conclusion from the Government Inspectorate at the end of 2023 noted that allowing several solar power projects to enjoy the FIT rate of 9.35 U.S. cents per kWh for 20 years was not in compliance with regulations, requiring a recalculation of the electricity purchase price.

Accordingly, the FIT1 rate of 9.35 U.S. cents per kWh may fall to the FIT2 rate of 7.09 cents or even 4.8 cents, down 24-47% from the current rate paid by the Vietnam Electricity (EVN).

The Ministry of Industry and Trade (MoIT) said that the adjusted rate reflects the actual investment and operational costs.

However, many businesses argued that this rate is not suitable, given that interest rates in Vietnam are significantly higher than in other countries in the region.

At an event held for FDI businesses investing in renewable energy in Ho Chi Minh City on Friday, a representative of Thailand-backed B.Grimm Power Vietnam stated that the company’s two 500 MWp projects are being heavily impacted.

The firm borrowed funds from Vietnamese bank BIDV to invest in the projects. If the FIT2 or the lower rate (4.8 cents per kWh) is applied, the company will not be able to recover its investment and will be unable to repay its loans, the rep claimed.

Sharing similar concerns, Tran Minh Tien, CEO of the Xuan Tho 1-2 and My Son 1-2 solar plants of Thailand’s Bangkok Glass Energy (BGE), claimed that the company faces bankruptcy risks if the FIT is revised.

BGE has invested in these projects based on the FIT1 (9.35 U.S. cents), but they now faces the risk of being subject to the FIT2 (7.09 cents). Moreover, the company purchased the projects from a partner at a higher investment rate, resulting in significant losses if the price is recalculated.

Not only BGE or B.Grimm Power but also Dragon Capital, a foreign investment fund with three renewable energy projects in Vietnam, has not received any payments since September 2023.

Nguyen Huu Quang, portfolio manager of clean investments at Dragon Capital, stated that the retroactive adjustment of the FIT based on the issuance date of the project completion acceptance document lacks clear legal grounds.

Currently, the parent company in Singapore is providing financial support to repay loans for a 40 MWp project in Vietnam, but if the situation is not resolved, it will not be able to continue investing, he added.

According to a report from the Ministry of Industry and Trade, 173 solar and wind power plant projects or project components connected to the national grid are facing this issue. Of these, nearly 150 are solar power projects that are delivering power to the national transmission lines.

About one-third of the projects involve foreign investors from Europe (France, Portugal, Spain, Switzerland, the UK) and Asia (India, Japan, the Philippines, Singapore, Thailand, China).

The total investment value of these foreign-owned projects, comprising more than 3,600 MWp of solar power and 160 MW of wind power, is estimated at approximately $4 billion.

The foreign investors argued that they have complied with the power purchase agreements (PPAs) signed with EVN, with the commercial operation dates (COD) already recognized.

The requirement for a project completion acceptance document from the trade ministry or a relevant authority was only introduced in Circular 10/2023, while most of these projects began operations before or in 2021.

In addition, comparing Vietnam's FIT with other countries' as a basis for adjustment is considered unreasonable by investors. For example, Cambodia has lower interest rates and cheaper investment costs, while in Vietnam, lending interest rates were up to 10-11% in the 2018-2019 period. Moreover, businesses had to bear exchange rate risks and high land rental costs.

According to some international financial institutions, the minimum FIT to ensure the efficiency of solar power investment needs to reach 9.6-10 cents per kWh, they argued.

Therefore, FDI firms proposed the government maintain the FIT rate as initially promised and refrain from retroactive adjustments. They also hoped that EVN would ensure full and timely payments.

Comments (0)
  • Read More
What makes NobleGo - Vietnam’s first home-bidding livestream platform - so notable?

What makes NobleGo - Vietnam’s first home-bidding livestream platform - so notable?

NobleGo – Vietnam’s pioneering AI-powered livestream real estate bidding platform developed by Sunshine Group – has completed its first 20 livestream sessions.

Real Estate - Tue, September 16, 2025 | 4:53 pm GMT+7

Japanese retailer Aeon to debut another northern Vietnam shopping mall by end-2026

Japanese retailer Aeon to debut another northern Vietnam shopping mall by end-2026

Japanese-backed Aeonmall Vietnam is ramping up construction on its Aeon Mall Ha Long project in Quang Ninh province, home to Ha Long Bay, with an aim to open it to the public by end-2026.

Industries - Tue, September 16, 2025 | 3:54 pm GMT+7

Hanoi terminates Vinaxuki auto plant project, repurposes land for commercial complex

Hanoi terminates Vinaxuki auto plant project, repurposes land for commercial complex

A long-stalled automotive manufacturing project by Xuan Kien Auto JSC (Vinaxuki) has been officially terminated by Hanoi authorities, and the reclaimed land in Phuc Thinh commune will be repurposed for a new commercial and service complex.

Industries - Tue, September 16, 2025 | 2:44 pm GMT+7

Central Vietnam province reviews investment proposal for thermal power project after Thai EGATi pullout

Central Vietnam province reviews investment proposal for thermal power project after Thai EGATi pullout

Authorities in the central province of Quang Tri are evaluating a proposal from Power Generation JSC 1 (EVNGENCO 1), a subsidiary of state utility Vietnam Electricity (EVN), to take over the Quang Tri thermal power plant project, following the withdrawal of Thai investor EGATi.

Energy - Tue, September 16, 2025 | 1:44 pm GMT+7

Amata to sell stakes worth $46 mln in Vietnam units to Novaland-tied buyers

Amata to sell stakes worth $46 mln in Vietnam units to Novaland-tied buyers

Amata VN, the Vietnam arm of Thailand’s leading industrial park developer Amata, has approved a plan for its subsidiary Amata City Long Thanh Urban JSC (ACLT) to sell its remaining 51% stakes in two entities to local developer Novaland-linked buyers.

Real Estate - Tue, September 16, 2025 | 12:19 pm GMT+7

Vietnam already meets FTSE's criteria for stock market status upgrade: Finance Minister

Vietnam already meets FTSE's criteria for stock market status upgrade: Finance Minister

Vietnam has fulfilled the criteria for a stock market status upgrade by FTSE Russell through reforms aimed at facilitating foreign investment inflows into its market, said Minister of Finance Nguyen Van Thang.

Economy - Tue, September 16, 2025 | 9:36 am GMT+7

Banks should be allowed to distribute, invest in mutual fund certificates: Vietnam's finance ministry

Banks should be allowed to distribute, invest in mutual fund certificates: Vietnam's finance ministry

The Ministry of Finance is proposing a key reform that would allow commercial banks to invest in and distribute mutual fund certificates, as part of a broader plan to restructure the investor base and foster the development of Vietnam’s fund management industry.

Finance - Tue, September 16, 2025 | 8:00 am GMT+7

E-commerce boom a major driver of Vietnam's packaging paper industry growth

E-commerce boom a major driver of Vietnam's packaging paper industry growth

Vietnam's paper packaging industry is entering a period of strong growth, with an average annual growth rate forecasted at 10% until 2030.

Companies - Mon, September 15, 2025 | 10:20 pm GMT+7

Vietnam needs support from UK in developing international financial center: Deputy PM

Vietnam needs support from UK in developing international financial center: Deputy PM

Permanent Deputy Prime Minister Nguyen Hoa Binh has called on the UK and the City of London to continue supporting and accompanying Vietnam in promoting and introducing its international financial center (IFC).

Finance - Mon, September 15, 2025 | 10:12 pm GMT+7

Vietnam enforces 8% capital adequacy ratio for banks from Sept 15

Vietnam enforces 8% capital adequacy ratio for banks from Sept 15

Commercial banks and foreign bank branches in Vietnam must maintain a minimum capital adequacy ratio (CAR) of 8%, including at least 4.5% in Tier 1 core capital and 6% in Tier 1 capital, starting from September 15.

Banking - Mon, September 15, 2025 | 10:04 pm GMT+7

Tool for wood traceability management debuts in Vietnam

Tool for wood traceability management debuts in Vietnam

The Vn-WoodID application has been officially launched in Vietnam, becoming a key tool contributing to wood traceability.

Companies - Mon, September 15, 2025 | 10:00 pm GMT+7

Sun Group, US Embassy foster aviation-hospitality cooperation

Sun Group, US Embassy foster aviation-hospitality cooperation

Sun Group, in collaboration with the US Embassy in Vietnam, hosted the US – Vietnam Aviation Partnership Roundtable on September 12, bringing together 15 leading American corporations in aviation, technology, and financial services, opening up opportunities to position Phu Quoc as a new aviation and tourism hub in the region.

Companies - Mon, September 15, 2025 | 9:54 pm GMT+7

Vietnam tops Thai giant SCG’s overseas markets with 9% revenue contribution in H1

Vietnam tops Thai giant SCG’s overseas markets with 9% revenue contribution in H1

Vietnam remained the largest overseas market for Thailand’s Siam Cement Group (SCG) in the first half of 2025, contributing 9% of consolidated sales.

Companies - Mon, September 15, 2025 | 8:10 pm GMT+7

Central Vietnam to have new airport Mang Den

Central Vietnam to have new airport Mang Den

Procedures to adjust Vietnam's airport system planning, including the addition of Mang Den Airport in central Vietnam, are being proceeded, according to the Ministry of Construction.

Infrastructure - Mon, September 15, 2025 | 5:16 pm GMT+7

Vietnam's government seeks to position country as 'regulated hub for digital assets in Asia': Dragon Capital

Vietnam's government seeks to position country as 'regulated hub for digital assets in Asia': Dragon Capital

The Vietnamese Government has advanced the regulation of digital assets, with a resolution launching a five-year pilot framework for issuance and trading. This framework signals the Government’s intent to position the country as a regulated hub for digital assets in Asia, which could attract new capital inflows, write Dragon Capital analysts.

Economy - Mon, September 15, 2025 | 2:20 pm GMT+7

Agribank introduces sizable $4.17 bln preferential credit package

Agribank introduces sizable $4.17 bln preferential credit package

Right from the beginning of 2025, Agribank launched a substantial preferential credit package worth VND110 trillion ($4.17 billion) to support individual customers.

Companies - Mon, September 15, 2025 | 1:32 pm GMT+7