O Mon III gas-fired thermal power plant faces difficulties in using ODA capital

The Ministry of Industry and Trade has just sent a report to the Prime Minister and Deputy Prime Minister Tran Hong Ha on a series of problems related to the O Mon III thermal power project using Japanese ODA capital.

The project has a total investment of over VND25,200 billion, of which ODA capital is over VND17,600 billion and counterpart capital is over VND7,500 billion. However, when the Ministry of Planning and Investment sought opinions from agencies, there were still different opinions between the Ministry of Finance and the State Capital Management Committee at Enterprises (Capital Management Committee) on the proposal to apply the ODA capital re-lending mechanism.

The Capital Management Committee proposed to implement the re-lending plan and not bear the credit risk, while the Ministry of Finance proposed to implement the re-lending plan and bear all the credit risk.

The Block B gas-power project chain will be an important source of additional electricity to the national power system in the Southern region. Illustration photo: Luong Bang

According to the report of the Capital Management Committee and EVN, currently no domestic commercial bank has enough credit limit to re-lend and bear the credit risk of the entire ODA loan of the Japanese Government for this project (estimated at about 17,670 billion VND). If two or more domestic commercial banks participate in re-lending, it will not be suitable with the disbursement process of the Japanese side.

"Because the above problems have not been resolved, the Ministry of Planning and Investment has not yet submitted to the Prime Minister for approval the proposal for the O Mon III power plant project using ODA capital from the Japanese Government," the Ministry of Industry and Trade reported.

The Ministry of Industry and Trade noted: If this problem is not resolved completely, it may lead to the risk that the project chain cannot be implemented.

The Ministry of Industry and Trade assessed: With the goal of reducing carbon emissions and moving towards carbon neutrality by 2050, gas-fired power plants play an important role, as they are an intermediate type in the energy transition process. The implementation of the Block B gas-power project chain is consistent with the above trend, while making full use of domestically exploited gas resources.

According to the Ministry, EVN's proposal to include the O Mon III power plant project in the list of priority investment projects of the State to apply the mechanism of re-lending ODA capital without bearing credit risk is well-founded.

The Ministry of Industry and Trade recommends that the Prime Minister and Deputy Prime Minister agree in principle that the O Mon III project is a priority investment project of the State to apply the ODA capital re-lending mechanism in which the re-lending agency does not bear credit risks according to the provisions of Clause 2, Article 35 of the Law on Public Debt Management 2017 and Decree No. 97/2018/ND-CP.

The Ministry of Industry and Trade proposed to assign the Ministry of Planning and Investment to urgently report to the Prime Minister for approval of the proposal for the O Mon III Thermal Power Plant Project using ODA capital from the Japanese Government, to be completed in May 2023.

The O Mon III Power Plant Project is one of nine power source projects of EVN that the Government Standing Committee has directed to quickly resolve investment procedures to ensure supply to the country.

The Block B gas - power project chain (including Block B Gas Field Development Project, Block B - O Mon Gas Pipeline Project, O Mon I, II, III, IV Projects) is large-scale with an expected annual gas exploitation output of about 5.06 billion m3 of gas/year, supplying 4 power plants at the O Mon Power Center with a total expected installed capacity of 3,810 MW. When put into operation, it will bring great benefits to the country.

According to reports from PVN and EVN, the entire Block B gas-power project chain brings in revenue for the Government of up to 30 billion USD, and the profits of the parties participating in the project chain (mainly state-owned enterprises) are 19 billion USD.