The power project is stalled, awaiting a boost.

The sluggishness of most liquefied natural gas (LNG) power plant projects in recent years could seriously impact national energy security.

Not much has changed yet.

"According to reports from several localities and monitoring by specialized units of the Ministry of Industry and Trade , the implementation of gas-fired power projects has not changed much, except for the Nhon Trach 3 and 4 power plant projects. If this situation continues to recur, national energy security will be seriously affected."

This statement was made by Mr. Nguyen Hong Dien, Minister of Industry and Trade, at a meeting with ministries, sectors, localities, energy corporations (Vietnam Electricity Group - EVN, Vietnam Oil and Gas Group - PVN) and investors regarding thermal power projects using domestically extracted natural gas and liquefied natural gas (LNG) included in the list of key investment projects of the National Power Development Plan VIII, which took place on May 24th.

In fact, gas-fired power projects, including domestic natural gas and liquefied natural gas, are considered extremely important power sources because they can serve as a flexible, low-emission base power source – aligning with Vietnam's goal of achieving carbon neutrality by 2050.

Since the beginning of the 15th Government's term, the Government, the Prime Minister , and the Ministry of Industry and Trade have focused on directing and urging the implementation of key energy projects; the Ministry of Industry and Trade has also regularly held working sessions with localities, ministries, and relevant investors to expedite project implementation. However, the results have been very modest.

"There have been six working sessions between representatives of the Steering Committee, the Ministry of Industry and Trade, and other ministries and agencies with relevant localities and corporations regarding gas-fired power projects, but the situation has not progressed much, except for the Nhon Trach 3&4 power project," Mr. Dien said.

As of May 22, 2024, most gas-fired power projects are in the investment preparation phase and have not made much progress. Three LNG gas-fired power projects – Ca Na, Nghi Son, and Quynh Lap – with a total capacity of 4,500 MW, have yet to select investors. Regarding the Hai Lang Phase I project in Quang Ninh , the feasibility study (FS) has not yet been completed as requested by the Department of Electricity and Renewable Energy, and therefore needs to be resubmitted to the Ministry of Industry and Trade for appraisal.

In addition, the Bac Lieu LNG Project, Hiep Phuoc Phase I, and O Mon 2 have not yet completed negotiations for Power Purchase Agreements (PPAs). The Long An I and II projects have not yet completed the adjustment of investment policies and have not had their Feasibility Study (FS) approved. For the Son My I and Son My II BOT projects, the investors have not yet completed the FS as required for approval.

Even the Nhon Trach 3&4 Project, which is 85% complete and scheduled for commercial operation from November 2024, has not yet officially signed a PPA.

Waiting for the mechanism

In discussions with reporters from the Investment Newspaper, many experts stated that the delay in selecting investors in some localities is due to the procedural requirements of the implementation process. However, even after selecting an investor, the question of when the factory will become operational remains difficult to answer clearly.

According to the National Power Development Plan VIII, Vietnam plans to develop 30,424 MW of gas-fired power by 2030. Of this, 10 projects will use domestically produced natural gas, with a total capacity of 7,900 MW, and 13 projects will use imported LNG, with a total capacity of 22,524 MW.

This can be seen in the reality of the Bac Lieu LNG power plant project. Although an investor was selected in January 2020, four years ago, the situation remains very uncertain. “The Nhon Trach 3&4 LNG power plant project, while being implemented vigorously, has the backing of PVN – a very large entity. But even with this support, it's not easy to implement other gas-fired power plant projects when the mechanisms are so unclear. Private investors are left with no choice but to wait,” commented Mr. PD, a representative of a foreign investor.

Sharing this reality, Mr. Nguyen Binh, a power project development expert, said that the draft mechanism for gas-fired power projects issued by the Ministry of Industry and Trade mentions a minimum contracted electricity ratio (Qc) of 70% and a contract duration of no more than 7 years. However, no private investor can achieve this level.

“To repay the bank loan, the project must sell approximately 80-85% of its annual designed electricity output, and the repayment period must extend at least 9-12 years, depending on the type and scale of the project. For example, at the Hai Lang Project, Korean investors proposed a Qc level of 85-90% to ensure the feasibility of financing,” Mr. Nguyen Binh shared.

This person also stated that the mere fact that the electricity selling price is set in VND has already made many investors hesitant, due to concerns that strong exchange rate fluctuations will affect revenue and loan repayment.

According to the requirements of the Ministry of Industry and Trade, before June 30, 2024, investors must report to the competent authorities, the State Steering Committee for national important programs, works, and projects in the energy sector, and the governments of provinces and cities on the commitment to the project implementation progress with the overall and highest goal of achieving commercial power generation before 2029.

Given that constructing a gas-fired power plant project takes 3.5-4 years, to achieve commercial power generation before 2029, projects need to secure loan financing before 2026. However, securing foreign loans requires a formally signed power purchase agreement, and negotiations for this agreement, such as the ongoing Nhon Trach 3&4 project, have taken no less than two years, while the Bac Lieu LNG power plant project has been stalled for four years.

Source: https://baodautu.vn/du-an-dien-i-ach-cho-don-bay-d216260.html