Lackadaisical LNG progress hinders plans

June 06, 2024 | 16:00
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A number of the country’s liquefied natural gas-to-power projects are moving forward at such a snail’s pace that it is threatening the implementation of the nation’s power development plan.

At a meeting in May to push liquefied natural gas (LNG) projects ahead, Minister of Industry and Trade Nguyen Hong Dien voiced his concern that most ventures were still 9-12 months behind schedule. If this continues, it will severely affect energy security and disrupt the implementation of the Power Development Plan VIII (PDP8).

Lackadaisical LNG progress hinders plans
Two LNG-to-power projects are currently being built in the south of the country, Photo: Shutterstock

“Localities and investors must report their projects to the government and the ministry before June 25. Localities need to rely on the investor’s committed progress to urge and handle the investor’s responsibilities. There will be strict sanctions against those who are behind schedule, and we may even consider withdrawing them,” said Minister Dien.

To Xuan Bao, director general of the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade (MoIT), said that most of the gas-to-power projects in the process of investment preparation had not yet made much progress, especially at Ca Na, Nghi Son, and Quynh Lap, with a total capacity of 4,500MW, which had not yet selected investors.

“For instance, Hai Lang phase 1 in Quang Ninh province has not yet completed their feasibility study,” Bao said. “Bac Lieu, Hiep Phuoc phase 1, and O Mon 2 have not completed power purchase agreement (PPA) negotiations, while the Long An I and II projects have not completed the investment policy adjustment work or feasibility studies.”

According to the PDP8, the total capacity of gas power plant projects invested in construction and put into operation by 2030 is 30,400MW. Of which, the total capacity of gas power plants using domestically exploited gas is 7,900MW, and the total capacity of gas power plants using LNG is 22,500MW. Currently, problems in LNG gas power schemes are mainly related to negotiating and power purchase agreements (PPA) signing contracts, site clearance, grid connection agreements, incentives, and investment guarantees.

Located in the central province of Quang Tri, the $2.3 billion Hai Lang LNG project (phase 1), funded by a consortium of T&T Group, Korea Gas Corporation, Hanwha Energy Corporation, and Korea Southern Power, has so far completed the approval of agreements on clean water supply, power supply, documents on supplying construction materials, and the location of construction material waste dumping sites. However, some 13 agreements have not yet been agreed upon by related authorities.

To ensure progress, Quang Tri People’s Committee has proposed content on the agreement to connect Hai Lang LNG phase 1 to the national power system as well, as PPA contracts.

Faced with problems in the process of LNG projects, the MoIT has proposed to establish an inter-sectoral working group of the government. According to the proposal put forth, the working group will focus on researching and proposing mechanisms, policies, and urgent and important issues, and propose amendments to legal documents, ensuring synchronisation and feasibility, and submitting to authorised agencies for consideration and decision.

Lam Nguyen Hoang Thao, foreign associate at Russin & Vecchi told VIR, “It is critical that the government provides clear guidance as to its needs, so that problems can be managed around these needs. The government and power producers can then harmonise benefits and share any risks, which is very necessary in a working PPA.

The MoIT last week adopted a electricity price framework for LNG power plants, with the maximum price at 10.79 US cents per kWh., exclusive of VAT.

Currently, Vietnam has no LNG-to-power projects in operation. The first two ventures in Vietnam, Nhon Trach 3 and Nhon Trach 4, are currently being built in the southern province of Dong Nai.

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