Narrative
Full Description
Project narrative
On December 28, 2020, a syndicate of seven lenders — including the Bank of China (BOC) — signed a $1.7668 billion USD syndicated loan agreement with Vung Ang 2 Thermal Power Joint Stock Company (VAPCO) — is a Vietnam-incorporated special purpose vehicle (SPV) and joint venture of Chugoku Electric Power Company (20% equity stake), Korea Electric Power Corporation (KEPCO) (40% equity stake), Mitsubishi Corporation (25% equity stake), and Shikoku Electric Power Company (15% equity stake). — for the 1.2 GW Vung Ang 2 Coal-Fired Power Plant Independent Power Project (IPP). This loan was divided into four tranches, all with a maturity period of 20 years and a final maturity date of December 27, 2040: a $496.61 million USD term loan tranche, a $210.11 million USD term loan tranche, a $636.05 million USD term loan tranche, and a $424.03 million USD term loan tranche. All lenders, including BOC, contributed $70.94 million USD to the $496.61 million USD term loan tranche. Record ID#105145 captures BOC's contribution. In addition to BOC, the following lenders contributed to the tranche: Export-Import Bank of Korea (KEXIM), Japan Bank for International Cooperation (JBIC), MUFG Bank, Ltd., Mizuho Bank, Sumitomo Mitsui Banking Corporation (SMBC), and Sumitomo Mitsui Trust Bank (SMTB). Four lenders, including BOC, contributed $45.02 million USD to the $210.11 million USD term loan tranche. SMTB contributed $30.02 million USD. Record ID#105146 captures BOC's contribution. In addition to BOC, the following lenders contributed to the tranche: MUFG, Mizuho, SMBC, and SMTB. Five lenders, including BOC, contributed $127.21 million USD to the $636.05 million USD term loan tranche. Record ID#105147 captures BOC's contribution. In addition to BOC, the following lenders contributed to the tranche: MUFG, Mizuho, SMBC, and SMTB. Five lenders, including BOC, contributed $84.81 million USD to the $424.03 million USD term loan tranche. Record ID#105148 captures BOC's contribution. In addition to BOC, the following lenders contributed to the tranche: MUFG, Mizuho, SMBC, and SMTB. BOC contributed $327.89 million USD to the loan syndicate in total. The proceeds, alongside $527 million USD in equity, were to be used by the borrower to finance the construction of the 2x600 MW Vung Ang 2 ultra-supercritical coal-fired power plant in the Vung Ang district of Ha Tinh province. This was an expansion of the existing Vung Ang plant. The project was under a build-own-operate (BOO) model with a 25-year Power Purchase Agreement (PPA) from state-owned Vietnam Electricity Doosan Heavy Industries & Construction, Samsung C&T, General Electric, and China Energy Engineering Group Guangdong Power Engineering Co. (Energy China GPEC) served as engineering, procurement, and construction (EPC) contractors. The project was expected to be commissioned in 2024. The project had reached 10.9% completion in July 2022. As of April 2024, construction was 83% complete with Unit 1 due to begin operating in June 2025 and Unit 2 to begin operating in October 2025. This project was heavily criticized on environmental and social grounds, with its proximity to the Formosa steel plant and the Vung Ang I coal power plant, which had caused environmental disasters and severe pollution especially criticized. The project included relocations without full consent of the locals, who vigorously opposed the project, and its influence on air pollution and water use was also of concern. In October 2020, 18 investor institutions led by Nordea Asset Management issued a letter to the project's developers and financiers imploring them to abandon the project and cease the construction of a new coal-fired plant.