Proposal for imported LNG power project to enjoy 75% offtake for 15 years

The Government has just submitted a document to the National Assembly Standing Committee on the issuance of a National Assembly resolution on mechanisms and policies to remove difficulties in developing national renewable energy in 2026-2030.

Nhon Trach 3 and 4 gas-fired thermal power plant project - Photo: NGOC AN

Authorized by the Prime Minister, Minister of Industry and Trade Nguyen Hong Dien signed the submission, emphasizing the need to submit to the National Assembly a specialized resolution on policy mechanisms to remove difficulties for national energy development in the 2026-2030 period.

Extend the period of 75% coverage

Regarding the development of gas-fired power projects using imported liquefied natural gas (LNG), the draft resolution clearly states that, in addition to legal regulations on investment and electricity, gas-fired thermal power projects using imported LNG that have accepted the results of project completion acceptance and start generating electricity before January 1, 2031, will be subject to a number of mechanisms.

Specifically, the long-term minimum contract power output must not be lower than 75% of the average power output of many years of the gas-fired thermal power project using imported LNG. This mechanism is applied during the principal and interest repayment period but not exceeding 15 years from the date the project is put into operation.

Thus, with this new proposal, the Government has kept the commitment rate of off-take in the contract at no less than 75% of the electricity output previously proposed by the Ministry of Industry and Trade, but extended the application period of this mechanism by 5 years compared to the previous proposal of 10 years.

With this content, the Government's submission said that in the process of implementing the mechanism for developing gas-fired thermal power projects using imported LNG, the Ministry of Industry and Trade has recorded many opinions from investors and related units.

Accordingly, most opinions raised difficulties and proposed solutions, focusing on considering the application of a two-component electricity price mechanism (capacity price and electricity price); considering the application of a mechanism to commit to mobilized electricity output (undertake mechanism).

Enterprises proposed to consider adjusting the long-term minimum contract electricity output to be higher than 65% (the current regulation) and extend the application period to 20 or 25 years, instead of only applying for a period of no more than 10 years as originally proposed.

Support a more specific and innovative mechanism on long-term minimum contract output

According to the Government, the adjusted Power Plan 8, gas-fired thermal power projects using imported LNG will be an important source of base electricity, contributing to ensuring electricity supply and actively supporting the large-scale integration of renewable energy sources and the national power system in the future, thereby contributing to meeting the goals of economic and social growth and ensuring electricity supply.

With the recommendations of investors at the meeting on August 13, the Ministry of Industry and Trade assessed the need to review and propose the National Assembly to consider issuing regulations on a more specific and breakthrough mechanism on long-term minimum contract electricity output to remove difficulties for these projects on the basis of compliance with legal regulations and in accordance with the policies and orientations in Resolution No. 70.

However, regarding other policy mechanisms proposed by investors, the submission clearly stated that most of the mechanisms bring benefits to investors, many of which have been applied to previous BOT power projects, while these are imported LNG power projects - independent IPP power projects.

Therefore, the Ministry of Industry and Trade assesses that there is not enough basis to propose application for imported LNG thermal power projects at this stage.

Previously, a series of investors had submitted petitions to the Prime Minister proposing mechanisms and policies for gas-fired power projects, due to concerns about risks in project implementation. Specifically, enterprises proposed to increase the level of output commitment from 75% in the draft resolution recently submitted by the Ministry of Industry and Trade to the Government to 90%, applied for the entire duration of the power purchase contract.

At the same time, the project is supported with payment mechanisms for fixed costs, operations, maintenance in electricity prices, fuel consumption associated with the mechanism of transferring gas price contracts to electricity prices, mobilizing enough electricity sources to fulfill gas consumption obligations.

Investors also hope that in case the National Electricity System and Market Operator (NSMO) mobilizes insufficient fuel, resulting in fuel offtake obligations, Vietnam Electricity (EVN) will pay the insufficient mobilized portion and support a payment mechanism in foreign currency at the actual exchange rate along with a number of other mechanisms.

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NGOC AN

Source: https://tuoitre.vn/de-xuat-du-an-dien-khi-lng-nhap-khau-duoc-huong-bao-tieu-75-trong-15-nam-20251112100705593.htm