Bank of China provides USD 114 million to syndicated loan for 1320 MW Vân Phong 1 Supercritical Coal-Fired Power Plant Project

In January 2011, the Vân Phong Economic Zone Management Authority approved a plan from Sumitomo Corporation, a Japanese enterprise, to build a two-unit, 1320 MW, coal-fired power plant in the port-industrial complex in Vân Phong Bay. In May 2017, Sumitomo Corporation signed and investment agreement with the Vietnam Ministry of Industry and Trade for the Vân Phong 1 Supercritical Coal-Fired Power Plant Project. In December 2017, the Sumitomo Corporation received an investment certificate and in March 2018, the environmental impact assessment was approved. Sumitomo Corporation created a special purpose vehicle called Van Phong Power Company Limited (VAN PHONG) to carry out the project. This project was supposed to be financed with about USD 1 billion in equity from Sumitomo Corporation and about USD 2 billion in debt. On April 19, 2019, a consortium of eight banks signed a USD 1.988 billion syndicated loan agreement with Van Phong Power Company Limited (VAN PHONG) for the 2 x 660 MW Van Phong 1 Supercritical Coal-Fired Power Plant Project. Of that total amount, JBIC, the lead arranger, provided a USD 1.199 billion export credit facility. In addition, seven commercial banks including the Bank of China (BOC) provided a USD 799 million term loan. According to IJGlobal, Bank of China contributed USD 114 million to this co-financed portion. The other co-financiers included Sumitomo Mitsui Banking Corporation, MUFG Bank, Limited, Mizuho Bank Limited, Sumitomo Mitsui Trust Bank Limited, Oversea-Chinese Banking Corporation Limited, and DBS Bank Limited. Nippon Export and Investment Insurance (NEXI) provided political risk coverage for the USD 799 million commercial facility. The Government of Vietnam provided a sovereign guarantee. The borrowing terms are unknown. According to IJGlobal, the loan agreement reached financial close on August 26, 2019. In this project, VAN PHONG will build, own and operate a super critical coal-fired power plant with an installed capacity of 1,320 MW (two units of 660 MW each) in Van Phong district, Khánh Hòa Province in southern Vietnam. Each unit will be equipped with a once-through pulverised coal-fired boiler and a steam turbine from Toshiba. Both the units will be fitted with electrostatic precipitators (ESP), flue gas desulphurisation (FGD) and low NOX burners to control emissions. The other components of the project include a coal handling plant, an ash pond area, and a switchyard. The Van Phong I power plant will use supercritical technology, with an expected emission intensity of 750 grams - 850 grams CO2 per kilowatt-hour. The plant provides about 9 billion KWh of electricity to the national grid every year. This amount of electricity is transmitted through the 500 KV Van Phong - Vinh Tan transmission line. Covering more than 350 hectares in Nam Van Phong, Ninh Hoa Town, the project is expected to boost the development of Van Phong Economic Zone. The Van Phong 1 thermal power station is estimated to require 3.4 million tonnes (Mt) of coal a year which will be sourced from Australia and Indonesia. The coal shipments for the project are expected to be started from 2023 onwards. This project is responsible for releasing the capacity of Van Phong Power Center (including Van Phong BOT Thermal Power Plant 1), Bac Ai Storage Hydropower Plant and renewable energy sources in Ninh province. Thuan, Binh Thuan into the national electricity system. The electricity generated from this plant will be sold to Vietnam Electricity (EVN), a state-owned enterprise, for 25 years. In August 2019, a consortium of four companies-- Toshiba Energy Systems & Solutions Corporations (Toshiba ESS), IHI Corporation, CTCI Corporation, and Doosan Heavy Industries & Construction-- was awarded the engineering, procurement and construction (EPC) contract for this project. Toshiba ESS will be in charge of the design, manufacturing, installation and test operation for the stream turbines and generators (STGs) used in the project. Lilama 18 Joint Stock Company is the sub-contractor in charge of installing 2 boilers, each with capacity of 660 MW, and each with a contract value of USD 28.6 million. The groundbreaking ceremony took place on October 6, 2019. In April 2021, construction began on the steel structure for Van Phong-1 Unit 1's coal-fired boiler. According to Vietnam's Power Development Plan 7 (PDP7), Phase I of the project was scheduled for completion in 2022 and 2023. Phase II of the project was cancelled. The design and procurement work at Van Phong 1 Project was affected when a number of contracts for supplying materials and equipment (especially goods originating from China) were interrupted due to COVID-19. The project has also been protested by anti-coal groups in Japan, and on April 16, responding to Bloomberg, Oversea-Chinese Banking Corp said two coal-fired power plants in Vietnam will be the last project that OCBC will finance. As of May 2022, at Van Phong 500kV substation project and connection, the substation ground has been completed, but the connection line part still has 5/62 foundation positions waiting for handover. According to the local government, because the route corridor passes through a densely populated area, the compensation plan and policy are not consistent, leading to the delay in handing over the site. Particularly for the 2nd circuit of the 220kV Krong Buk - Nha Trang transmission line, 89/93 foundation positions have been paid for, the rest of the people have not yet agreed to receive the money for handing over the ground. EVN said that if the project is behind schedule, the Government of Vietnam has to compensate USD 1 million per day to residents. If this transmission project is 6 months behind schedule, the amount to be compensated is about VND 5,000 billion. If it is more than 6 months, the BOT contract of Van Phong 1 Thermal Power Plant will be terminated early and the Government of Vietnam has to buy back the plant.

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