Investors urge Vietnam to fix legal hurdles to LNG power projects

A group of investors in Vietnam’s gas-fired power sector has urged the country's parliament to address regulatory gaps that have stalled multi-billion-dollar LNG and domestic gas-fueled power projects, warning that delays could derail the country’s energy transition targets.

In a petition responding to a draft energy resolution by the National Assembly, the investors said that despite the 2020 Resolution 55 and the eighth Power Development Plan (PDP VIII) prioritizing gas-fired projects as a cleaner alternative to coal, progress remains sluggish.

As of mid-2025, only the LNG-to-power Nhon Trach 3 & 4 plants in Dong Nai province are on track for timely completion, while major projects such as Hai Lang, Quang Ninh, Long An, Hiep Phuoc, Thai Binh, and O Mon 2 remain mired in negotiations over power purchase agreements (PPAs), gas sale agreements (GSAs), and financing.

The group warned that the impasse threatens Vietnam’s PDP VIII goal of adding 22.5 GW of imported LNG and 16 GW of domestic gas power capacity by 2030, which is essential to support renewable energy integration and grid stability.

Investors’ key proposals

The investors proposed adopting a two-part electricity tariff, covering both energy and capacity, to allow recovery of fixed capital and maintenance costs. The current single-component pricing model for independent power producers, they said, does not reflect the capital-intensive nature of LNG power projects.

They also called for state utility EVN to bear the “take-or-pay” obligation under gas supply contracts by embedding it into PPAs, ensuring payments even if plants are under-dispatched by the grid operator.

In case of project termination without investor fault, the government should buy out the plant at residual value, including outstanding debt, unrecovered equity, and unsettled fuel commitments, the group suggested.

The petition further recommended foreign exchange protection for USD-denominated costs such as fuel purchases, turbine maintenance, and loan repayments, either through direct USD-linked payments or compensation mechanisms pegged to exchange rate movements.

The investor group called on the National Assembly to incorporate the following mechanisms for LNG-to-power projects: (i) a minimum contracted electricity volume equivalent to at least 90% of the plant’s average annual output throughout its lifecycle; (ii) capacity payments covering fixed and O&M costs for unutilized output, regardless of actual generation; (iii) transfer of fuel offtake obligations to EVN, ensuring payment for under-dispatch; and (iv) electricity prices denominated in USD, paid in VND with regular FX adjustments.

Investors warned that without these special mechanisms, Vietnam risks losing momentum in its LNG transition – a key pillar in diversifying its energy mix and reducing reliance on coal.