China Eximbank contributes to $1.404 billion syndicated loan for 1200MW Vinh Tan 1 Coal-Fired Power Plant Construction Project (Linked to Record ID#39152, #38902, #100815, #100816, #100817, and #100818)

Project narrative

In December 2012, the Government of Vietnam awarded a Build-Operate-Transfer (BOT) contract to China Southern Power Grid Co., Ltd. (CGS), China Power International Holding Limited (CPI), and Vietnam Coal and Mineral Industries Group (Vinacomin) for the 1200MW Vinh Tan 1 Coal-Fired Power Plant Construction Project (VTPC1). Then, on December 31, 2014, five Chinese state-owned banks and Vinh Tan 1 Power Company Limited— a project company jointly owned by CGS (55% ownership stake), CPI (40% ownership stake), and Vinacomin (5% ownership stake) — signed a $1.404 billion loan agreement for the 1200MW Vinh Tan 1 Coal-Fired Power Plant Construction Project. Members of the syndicate included China Development Bank (CDB), China Construction Bank (CCB), Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), and China Eximbank. The loan carries a maturity of 18 years (final maturity date: December 31, 2032). However, its interest rate and grace period are unknown. Sinosure's Guangdong branch provided overseas investment equity and debt insurance for this project for 216 months. The Government of Vietnam also issued a sovereign guarantee in support of the loan. The borrower was to use the proceeds from the loan to partially finance an EPC contract signed on March 25, 2014 with a China Energy Engineering Group (CEEC) consortium consisting of Guangdong Electric Power Design Institute (GEDI) and Guangdong Power Engineering Corporation (GPEC). The total cost of this Independent Power Project (IPP) was about $1.755 billion and it was financed according to a debt-to-equity ratio of 80:20. The 20% equity contribution was jointly provided by China Southern Power Grid Corporation (CGS), China Power International and Vietnam Coal and Mineral Industries Group (Vinacomin) (see Record ID#39152). The purpose of the project was to construct a 1200MW coal-fired power plant — with two, 600MW power generation units (Unit 1 and Unit 2) — in Bắc Lũng commune, Lục Nam district, and Bắc Giang province. A formal groundbreaking ceremony took place on July 18, 2015. Unit 1 began commercial operations on July 6, 2018. Unit 2 began commercial operations on November 27, 2018. GEDI and GPEC were the main EPC contractors responsible for implementation. However, multiple Chinese subcontractors — including Dongfang Electric Corporation, the Second Construction Co., Ltd. Of China Construction Third Engineering Bureau (CSCEC3), China Construction (SEA) Corporation Ltd (CSCECSEA), Doosan Lentjes GmbH, and China Harbor Engineering Company Ltd. (CHEC) — were also involved in implementation. Power Construction Consulting Joint Stock Company 2 (PECC2) was the contractor responsible for construction supervision. In March 2019, Vietnam’s State Audit Agency found that the Vinh Tan 1 power plant had violated environmental laws. Violations included discharging cooling water into the sea without approval from the Environment Ministry, poor monitoring of wastewater, and nitrogen oxide emissions in excess of permit limits. It also found that the plant had limited coal ash storage capacity. The audit also criticized the Binh Thuan provincial government and the Ministry of Environment and Ministry of Industry and Trade for inadequate supervision of the project and lack of proper assessment of environmental impacts. Record ID#39151 captures the estimated financial commitment of China Eximbank; Record ID#100815 captures the estimated financial commitment of China Development Bank; Record ID#100816 captures the estimated financial commitment of ICBC; Record ID#100817 captures the estimated financial commitment of China Construction Bank; and Record ID#100818 captures the estimated financial commitment of Bank of China.