Lenders energise foreign-owned power projects

October 14, 2021 | 09:47
A handful of local and foreign banks are leveraging their insights and optimising financial resources to promote energy and power transition in Vietnam, thus contributing to the country’s sustainable national energy policy.
Lenders energise foreign-owned power projects
Lenders energise foreign-owned power projects, illustration photo

Vietnamese lenders Techcombank and MB last week inked an agreement to facilitate a $1.4 billion syndicated loan package for Nhon Trach 3 and Nhon Trach 4 gas power plants projects, backed by Vietnam’s second-largest electricity producer, PetroVietnam Power Corporation (PV Power). The projects are the first liquefied natural gas (LNG) ventures in which PV Power has arranged capital without guarantees from the Vietnamese government. As a result, Techcombank and MB become the mandated lead arranger of a consortium that supports bidding procedures, offshore loans, export credit agencies, and asset management.

Nhon Trach 3 and Nhon Trach 4 power plants based in the southern province of based in Dong Nai are the first and largest LNG projects in Vietnam with a combined capacity of 1,300-1,760MW, and are slated to be the electric load centres for the south of the country.

“PV Power expects the vast expertise of Techcombank and MB to smooth the path for it to be proactive in credit sources, as well as reduce the state budget burden on the national energy development path,” said Nguyen Duy Giang, deputy general director of PV Power.

MB board member Pham Nhu Anh told VIR, “Clean and sustainable energy has always been a strategic focus for us. With this collaboration, we will make great strides to bring best-of-its-kind financial services to contribute to the country’s energy development.”

Anh noted that MB has spent roughly $3 billion on key projects on wind power and solar power with Nhon Trach 3 and Nhon Trach 4 being the first major chemical gas project that MB has been involved in.

In 2020, Citibank and INGbank signed a letter of authorisation to provide financial assistance to the project. French financial services multinational Societe Generale also expressed its keen interest in lending for the two projects.

Elsewhere, HSBC Vietnam last week confirmed it would provide short-term green trade finance in renewable energy construction for Power Construction JSC No.1 (PCC1), a leading Vietnamese engineering, procurement, and construction company.

This is the first sustainable finance service that HSBC has offered to a local corporate in the wind sector, and the third for Vietnamese businesses in renewable energy in general, after two green facilities were provided to REE for its rooftop solar project last year.

Stephanie Betant, head of Wholesale Banking at HSBC Vietnam, said, “This first for renewable energy means we are particularly excited to provide green financing to PCC1 for wind power, a Vietnamese leader and a promising source of energy for Vietnam’s growing needs.”

Betant explained that the transaction reflects the efforts of HSBC Vietnam in supporting the government’s Resolution No.55/2020 on Vietnam’s energy development strategy for the decade, with a vision towards 2045, to prioritise clean energy.

The huge potential of Vietnam’s renewable energy, and wind energy in particular, continues to be acknowledged by foreign-owned financial institutions.

Last month, Proparco, a development finance group partly owned by the French Development Agency, granted a $50 million loan package to HDBank to support the lender’s portfolio of climate-friendly projects.

“Proparco has prioritised supporting private actors committed to the fight against climate change. We are delighted to initiate the partnership, which will contribute to the energy transition in Vietnam,” said Raphael de Guerre, head of Proparco’s office for North and Southeast Asia.

By Celine Luu

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