On average, it takes 7.5 years to complete one project.

The Ministry of Industry and Trade has just submitted a report to the Prime Minister on resolving difficulties and obstacles in implementing gas-fired and offshore wind power projects under the National Power Development Plan VIII.

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The investment in the power sector is progressing very slowly.

According to the Power Development Plan VIII, the total capacity of gas-fired power plant projects to be invested in, constructed, and put into operation by 2030 is 30,424 MW (23 projects), of which: the total capacity of gas-fired power plants using domestically extracted gas is 7,900 MW (10 projects), and the total capacity of gas-fired power plants using LNG is 22,524 MW (13 projects).

As of December 2023, only one gas-fired power plant, the O Mon I Thermal Power Plant (660 MW), which commenced operation in 2015, currently uses oil as fuel. The O Mon I Thermal Power Plant will switch to using gas as fuel once gas becomes available from the Block B gas field.

One project under construction is the Nhon Trach 3 and Nhon Trach 4 thermal power plant project, with a capacity of 1,624 MW, reaching 73% completion. The Nhon Trach 3 and Nhon Trach 4 thermal power plant project uses LNG from the Thi Vai LNG terminal.

Currently, the Thi Vai LNG terminal project has been completed and put into operation, ready to supply LNG to the Nhon Trach 3 and Nhon Trach 4 thermal power plants.

The remaining 18 projects are in the investment and construction preparation phase.

Assessing the progress of gas-fired power projects, the Ministry of Industry and Trade stated that the construction progress of combined-cycle gas turbine units, from the time of handover to commercial operation, requires at least 7.5 years. This includes approximately 2-4 years for negotiating the Power Purchase Agreement (PPA) and arranging loan financing.

"The duration of this phase is difficult to determine and highly variable, as it depends on the investor's capacity, experience, and finances, as well as the specific requirements in the PPA contract," the Ministry of Industry and Trade noted.

In practice, projects like the Nhon Trach 3 and Nhon Trach 4 thermal power plants have commenced construction (currently about 73% complete) but have not yet signed the PPA contract or secured the necessary loan financing.

According to the Ministry of Industry and Trade, gas-fired power projects that could be put into commercial operation before 2030 include: power projects in the O Mon Power Center; Nhon Trach 3 and Nhon Trach 4; and Hiep Phuoc. The total capacity of projects put into operation before 2030 is 6,634 MW.

The remaining projects can only be put into operation by 2030 if the PPA contract negotiations are completed and loan financing is arranged before 2027. The gas-fired power projects in the gas-fired power chain (Block B, Blue Whale) are also dependent on the progress of the upstream project to ensure the overall efficiency of the entire project chain.

The investor has high demands.

On the domestic investor side, investors often require that the PPA contract include a commitment to stable long-term production or a guaranteed electricity output, or the transfer of gas purchase commitments from the gas purchase contract to the electricity purchase contract; or the transfer of gas prices to electricity prices.

Foreign investors, however, always have very different requirements. In addition to the requirements mentioned above, foreign investors also require the PPA contract to be in English and Vietnamese (if there is a difference between English and Vietnamese, English takes precedence); applicable foreign law (UK or Singapore). Foreign investors require the Government to guarantee payment and contract termination by EVN, guarantee foreign currency conversion, guarantee risks related to the progress of the connection and transmission project, and grid and transmission incidents…

The Ministry of Industry and Trade argues that: The current regulations on electricity market operation do not stipulate a commitment to a minimum electricity output guarantee for power plants participating in the electricity market (physical guarantee). Regulating a mechanism for a physical electricity output guarantee for market participants is inconsistent with Article 17 of the Electricity Law mentioned above and Resolution No. 55-NQ/TW of the Politburo .

To provide a basis for implementing gas-fired power projects in the future, based on current regulations, the Ministry of Industry and Trade stated that it will continue to direct EVN and the investors of power plants to negotiate and agree on contracted electricity output and add it to the power purchase agreement.

However, EVN's agreements and commitments regarding long-term electricity production contracts with investors of gas-fired power projects will create practical problems and obstacles for EVN (as the electricity buyer of the project).

This includes cases where, at times, the amount of electricity that EVN commits to purchasing from various power plants will exceed actual demand. In such situations, the power plants will not generate electricity, but EVN will still have to pay for it, affecting EVN's financial balance if retail electricity prices are not adjusted in a timely manner.

However, the implementation of domestic gas-fired power projects, such as the gas-fired power-to-energy project chain like Block B and Blue Whale, will be effective and contribute to the state budget. Therefore, the Ministry of Industry and Trade proposes that the Government assign relevant ministries to develop a financial mechanism for EVN and PVN in the synchronized implementation of gas-fired power projects, without putting pressure on electricity prices or burdening EVN.

Recently, the Ministry of Industry and Trade reported to the Prime Minister, recommending that the Prime Minister agree in principle to the gas-electricity off-take mechanism based on the principle of horizontal transfer (transferring gas prices to electricity prices, transferring regulations on gas off-take in gas purchase and sale contracts to electricity purchase and sale contracts), and assigning the Ministry of Industry and Trade to direct relevant parties to negotiate gas purchase and sale contracts, gas sales contracts, and electricity purchase and sale contracts according to the principles approved by the Prime Minister.

To date, the Standing Committee of the Government has agreed in principle to transfer the gas price to the electricity price for the Block B, Blue Whale, and Nhon Trach 3&4 LNG projects.

Regarding the off-take agreement for electricity and gas output from the Nhon Trach 3&4 LNG project, the Standing Committee of the Government commented: "Negotiations on off-take agreements for electricity and gas output are business agreements between enterprises."

Due to difficulties and obstacles in developing gas-fired power projects (including projects using domestically extracted gas and LNG), offshore wind power is a very new issue involving many levels of authority and ministries. Therefore, the Ministry of Industry and Trade proposes that the Prime Minister establish an inter-ministerial working group of the Government to focus on researching and proposing mechanisms, policies, and urgent and important issues, while also proposing amendments to legal documents to ensure consistency and feasibility for submission to competent authorities for consideration and decision.
EVN is about to receive two foreign-invested gas-fired power plants . Two BOT gas-fired thermal power plants, invested in by foreign companies, are nearing the end of their 20-year contracts and will be transferred to Vietnam. EVN has been assigned to take over the project.