Sinohydro signs deferred payment agreement (DPA) with Dau Tieng Tay Ninh Energy Joint Stock Company (DTE) for the 240MW Dau Tieng Solar Power Plant

Project narrative

In 2018, Dau Tieng Tay Ninh Energy Joint Stock Company (DTE) — a special purpose vehicle and wholly-owned subsidiary of B. Grimm Power Public Company Limited (B.Grimm), at the time owned by both B.Grimm and Xuan Cau Group — entered into a deferred payment agreement (DPA) with Sinohydro Corporation Limited and Powerchina Huadong Engineering Corporation Limited, both of which are subsidiaries of Powerchina Group. The terms and monetary value of the DPA are unknown. The purpose of the DPA was to provide short term financing to construct the 240-megawatt (MW) Dau Tieng Solar Power Plant along the western edge of Dau Tieng Reservoir in Tay Ninh Province, Viet Nam. The 240 MW plant was to be part of the wider 420 MW Dau Tieng solar farm. In order to take advantage of a $0.0935 per kilowatt-hour fixed feed-in-tariff offered by the Vietnamese government, B. Grimm Power Public Company and Xuan Cau Group (the former joint venture co-parent of DTE) created DTE in June 2018 to construct the Dau Tieng solar farm. This offer required the solar power plants to be completed by June 2019, giving investors little time to seek more sustainable long-term financing. Thus, the power plant was originally financed through equity from B. Grimm Power Public Company and Xuan Cau Group, as well as the DPA agreement with Sinohydro Corporation Limited and Powerchina Huadong Engineering Corporation Limited. The project’s local environmental impact assessment report was approved by the People’s Committee of Tay Ninh Province on June 12, 2018 with Decision No. 1483/QDUBND. The 240MW Dau Tieng Solar Power Plant achieved its commercial operations date (COD) on June 13, 2019 and connected to the national grid. The project was undertaken by Sinohydro Corporation Limited and Powerchina Huadong Engineering Corporation Limited. The solar farm entered into a 20-year Power Purchase Agreement (PPA) with EVN. It directly serves the electricity demand of Ho Chi Minh City, the commercial center and one of the fastest-growing regions in Viet Nam. Then, on August 31, 2021, DTE signed a series of loan agreements worth $160.5 million -- including a included a $24,500,000 ‘A loan’ with the Asian Development Bank (ADB); a $128,00,000 syndicated ‘B loan’ agreement with ICBC (Thai), Standard Chartered Bank, Bangkok Bank Public Company Limited (BBL), Kasikornbank Public Company Limited, and Kiatnakin Phatra Bank; and an $8 million loan from Leading Asia’s Private Infrastructure Fund (LEAP) -- in order to restructure the project's financing and provide a longer-term financing solution. ICBC's contribution to this financing package is captured via Record ID#105189. In conjunction with the ADB decision to provide financing, the project's environmental and social impacts were reviewed in detail. The environmental and social measures and the institutional capacity and commitment of DTE to manage the project’s social and environmental impacts according to the requirements of ADB’s Safeguard Policy Statement were deemed adequate. DTE committed to address and implement an environmental and social corrective action plan for the project. The environmental and social compliance audit report from IBIS proposed a corrective action plan to comply with ADB’s requirements, which included the following: (i) strengthen the environmental and social capacity of the project team, (ii) implement an occupational health and safety plan and emergency plan to respond to operational safety risks and incidents, (iii) implement a waste management plan and strengthen housekeeping practices, and (iv) enhance the project’s grievance redress mechanism and adopt a stakeholder engagement plan. DTE agreed to implement the corrective action plan to address the gaps before the loan drawdown. It agreed to regularly report to ADB on the project’s compliance with ADB’s requirements and applicable local environmental, health, and safety laws and regulations.