Vietcombank to provide $166 mln credit for PV Power projects

“Big 4” lender Vietcombank and Petrovietnam Power (PV Power) have signed a VND4 trillion ($165.6 million) credit agreement for partial funding of two LNG-to-power plants in southern Vietnam.

The 13-year agreement with a grace period of three years signed Tuesday will serve the Nhon Trach 3 and 4 projects in the eponymous district, Dong Nai province.

PV Power, a subsidiary of state-run PetroVietnam, initiated capital arrangements for the project in 2018 and is still in negotiations with foreign partners including Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and a partnership between ING and Citibank.

Construction of the $1.4 billion project with a total capacity of 1,620 MW began in 2021 with the initial task of levelling the construction site.

The Nhon Trach 3 and 4 power plants are scheduled to enter commercial operations in November 2024 and May 2025, respectively. Nhon Trach 3 and 4 are the first LNG-to-power factories in Vietnam.

PetroVietnam CEO Le Manh Hung said the power plants are part of the group’s efforts to advance the nation’s zero emission commitment made at COP 26 (United Nations Climate Change Conference).

Arranging capital for the projects has proved difficult without the availability of government guarantees. Another difficulty is the uncertainty over ensuring a fixed power output during the loan term, PV Power said in a 2022 review.

The engineering, procurement and construction (EPC) package, the projects’ largest, was assigned to a consortium comprising South Korea’s Samsung C&T Corporation and Vietnam’s Lilama in March 2022.

By the end of 2022, PV Power completed contractor selection for 17 out of 18 project packages. The remaining package deals with consultancy services for formulating a plan to convert surface water and wastewater discharges into fresh water sources.

In November 2022, PV Power and a consortium of contractors comprising GE Global Parts & Products GmbH and GE International Inc. (GE) signed a long-term maintenance agreement for the main equipment block of both power plants.

State utility Vietnam Electricity's (EVN) National Power Transmission Corporation (NPT) is responsible for building 220 kV and 500 kV transmission lines in line with the power plants’ progress.

The project is currently stalled because Nhon Trach district is yet to complete site clearance.

The recently approved national power development plan, PDP VIII, is expected to open a new chapter for Vietnam's electricity industry, with gas to become a key fuel in 2021-2030. The list of priority LNG projects for development by 2035, contained in Table 1 of Appendix II of the national plan, include: Quang Ninh (1,500 MW); Thai Binh (1,500 MW); Nghi Son (1,500 MW); Quang Trach II (1,500 MW); Quynh Lap/Nghi Son (1,500 MW); Hai Lang Phase 1 (1,500 MW); Ca Na (1,500 MW); Long Son (1,500 MW); Hiep Phuoc Phase 1 (1,200 MW); Long An I (1,500 MW); Long An II (1,500 MW); and Bac Lieu (3,200 MW).