Japan's Tokyo Gas and Kyuden Group have inked a memorandum of understanding with Truong Thanh Vietnam JSC on jointly developing an LNG-to-power project with a phase-one capacity of 1,500 megawatts in northern Vietnam.
The MoU was signed early this week at the Asia Green Growth Partnership Ministerial Meeting (AGGPM) in Japan. It was one of the 12 Asian projects selected by the AGGPM organizers for signing in the presence of delegates.
The proposed project, carried out in Thai Binh province, is in Vietnam’s draft power development plan VIII for the 2021-2030 period, with vision until 2045. However, the plan, better known as PDP VIII, has not been approved yet.
After PDP VIII is promulgated, projects named in the plan will select investors for implementation. Normally, investor selection will take place via bidding.
Even when investors are selected and awarded investment certificates, these are only the initial steps in the implementation process and does not guarantee the projects will smoothly come online. The key for LNG-to-power projects is to secure a power purchase agreement (PPA) from state utility Vietnam Electricity (EVN), because only this will ensure financing.
A typical example of now projects can stall is the 3,200 MW Bac Lieu LNG-gas-power project in the eponymous Mekong Delta province.
Delta Offshore Energy (DOE), the $4-billion project investor, initially aimed to start construction in the second quarter of this year, has become entangled in procedure bottlenecks.
It is still negotiating a PPA with EVN. Without a signed PPA, the investor cannot negotiate with financial institutions for capital arrangements, according to the Singaporean company.
Up to now, no LNG gas power plants operate in Vietnam. In all, nine LNG-to-power projects have received in-principle agreement as independent power producers. Of these five found investors and could enter the phase of negotiating a PPA with EVN.
Others like LNG Long Son, LNG Ca Na, LNG Long An and LNG Quang Ninh are yet to find investors or only officially announced their investors recently.