Foreign loans in Vinh Tan 4 expansion may get government guarantee

The construction site of the Vinh Tan 4 power plant expansion project

The prime minister (PM) recently decided to add the Vinh Tan 4 expansion project to the list of priority projects subject to consideration for the issuance of government guarantees in 2018.

Besides, the PM also decided to increase the limit of foreign loan guarantees by an additional $160 million for investment projects in 2018, while approving the contents of the letters of guarantee and assigning the Ministry of Finance to sign guarantee letters on behalf of the government for the JBIC/NEXI export credit contact loan agreement.

The PM told the Ministry of Justice to issue a legal opinion on the letter of guarantee and the guarantor, assigning Electricity of Vietnam (EVN) to take charge of effectively implementing the project in accordance with the scheduled progress and to fully allocate equity in line with the annual progress of the project.

In April 2016, EVN officially kicked off the construction of the project with a total investment capital of $1.2 billion.

Scheduled to be put into formal operation in late 2019, the extended plant will contribute to ensuring the power supply in service of the socioeconomic development of the South Central region, while enhancing the level of trust, stability, and economic operations of the national power system.

In September 2017, four commercial banks inked a deal on Thursday to provide VND5.4 trillion ($235.28 million) in credit for the project.

Notably, An Binh Bank acted as the coordinator with Vietnam Bank for Agriculture and Rural Development, Tien Phong Bank, LienVietPost Bank, and Ho Chi Minh City Housing Development Bank to arrange the financial package.

Under the contract, the loan would have a term of 15 years (180 months), with a grace period of 60 months.

The Vinh Tan 4 thermal power expansion project, invested by EVN, is one of the four thermal power plants in the Vinh Tan power complex in the south central province of Binh Thuan.

The 1,244MW Vinh Tan 2 plant, invested in by state-run EVN, started generating power in March 2014.

Meanwhile, the $1.75 billion Vinh Tan 1 thermal power project, the largest Chinese-invested project in Vietnam, is expected to come into commercial operation this month, five months earlier than initially scheduled.

Vinh Tan 1 is expected to provide more than 7.2 billion KWh per year, increasing the southern region's electricity supply and helping reduce the region's dependence on hydropower—especially during the dry season or droughts.