Long awaited dream of new power projects continues

November 15, 2022 | 11:16
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Despite the fact that power consumption is still relatively low, the shortage of new energy projects coming onstream poses a threat to national power security over the coming period.

On November 2, Quang Ninh Department of Planning and Investment granted a business registration certificate to Quang Ninh LNG JSC (QN LNG Power). With $4.34 million in charter capital, QN LNG Power is a contractor consortium consisting of PetroVietnam Power Corporation (PV Power), COLAVI JSC, Marubeni Corporation, and Tokyo Gas Co., Ltd.

On September 9, PV Power’s Board of Management adopted a resolution to contribute 30 per cent of QN LNG Power’s charter capital.

Long awaited dream of new power projects continues
Developing gas-fired power projects in the current context is deemed challenging

Forming QN LNG Power is seen as a big step to ensure the project’s progress.

Earlier, on November 10 Quang Ninh’s leaders held a working session with leaders of relevant management agencies and the investor consortium on the project's progress.

However, nearly one year after the groundbreaking ceremony, the project seems to be facing delays as it has only just acquired the investment certificate and has yet to form the project enterprise or complete the feasibility study.

This has been blamed on the consortium’s loosening commitment to fulfilling the required procedures in order to facilitate the associated LNG specialised port.

Commercial power consumption in Vietnam has remained low in recent years due to the impacts of the pandemic.

Amidst the threat of imminent delays, Quang Ninh leaders have asked the investor consortium to increase the pace of site clearance and simultaneously required Cam Pha People’s Committee to hand over space to the project this November.

In light of the approved plan, the project has commenced investment from the second quarter of this year, aiming to reach completion in the second quarter of 2027 and start operations in Q3/2027.

QN LNG Power was granted an investment certificate by the Quang Ninh People’s Committee in October 2021 with a capacity of 1,500MW and an investment value of just over $2 billion.

Once operational, the project will supply the national power grid with about 9 billion kWh a year and contribute $2.5 billion to the local budget over 25 years.

At this point in time, however, it remains unknown when the project will actually begin construction.

In light of Clause 17 in Circular No.57/2020/BCT from the Ministry of Industry and Trade, it is compulsory for the relevant parties to sign a power purchase agreement (PPA) before the date the project launches construction.

Meanwhile, the negotiations for a PPA contract between Electricity of Vietnam (EVN) and the project's consortium are reportedly yet to begin.

Along with QN LNG Power, several other gas-fired power projects which began their development phase earlier – such as the Bac Lieu LNG project – have also reached a standstill.

Many bottlenecks during negotiations at the Bac Lieu LNG project have yet to be addressed even though the proposals were sent to the government’s special task force more than a year ago.

Energy expert Nguyen Binh stated, “Though both the investor and Bac Lieu province have said that just 5 per cent of the work volume is left unsolved, the impasse has existed for a year and it is still unclear how it will be resolved."

The Nhon Trach 3 and 4 gas-fired power projects in the southern province of Dong Nai also face bottlenecks associated with PPA agreement negotiations.

Commercial power consumption in Vietnam has remained low in recent years due to the impacts of the pandemic. In 2022, the power sector was expected to regain a growth pace of around 10 per cent to match pre-pandemic figures, but in fact, the growth has sat at 5-6 per cent.

This makes it hard for the state-owned power management authority EVN to make proper power consumption forecasts for the next 5-7 years and offer investors a good power purchase price due to the volatility in the current market.

As a state-owned unit, it is a must for EVN to avoid losses to the state coffers, partly leading to the PPA negotiation challenges.

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By Huong Thuy

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