Narrative
Full Description
Project narrative
On October 13, 2013, Harbin Electric International Engineering Co., Ltd. (HEI) and Vinh Tan 3 Energy Joint Stock Company (VTEC) — a special purpose vehicle (SPV) and joint venture between OneEnergy Ventures Limited (49% ownership stake), Vietnam Electricity (EVN) (29% ownership stake), and Thai Binh Duong Group (Pacific Corp) (22% ownership stake) — signed a framework cooperation agreement for the 1980MW Vinh Tan 3 Coal-Fired Power Plant Construction Project. Then, in November 2015, China Development Bank (CDB) and signed a Financing Memorandum of Understanding (MoU) for this project. Then, in September 2016, five Chinese state-owned banks and VTEC signed a $2 billion syndicated loan agreement for the 1980MW Vinh Tan 3 Coal-Fired Power Plant Construction Project. Chinese 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 Bank of Communications (BoComm). CDB was the mandated lead arranger and Sinosure provided export buyer’s credit insurance. The borrowing terms of the non-recourse loan are unknown. Record ID#65742 captures the estimated financial commitment of China Development Bank, Record ID#100837 captures the estimated financial commitment of China Construction Bank, Record ID#100838 captures the estimated financial commitment of ICBC, Record ID#100839 captures the estimated financial commitment of China Bank of Communications, and Record ID#100844 captures the estimated financial commitment of Bank of China. The borrower used the proceeds from the syndicated loan to partially finance an EPC contract signed on June 23, 2015 with Harbin Electric International Company. The purpose of the project was to construct a 1980MW coal-fired power plant — with three power generation units (Unit 1, Unit 2, and Unit 3) — in Vĩnh Tân commune, Tuy Phong district, and Bình Thuận province. In December 2019, CLP announced that it would no longer invest in new coal-fired power plants, thereby raising questions about the financial viability of the 1980MW Vinh Tan 3 Coal-Fired Power Plant Construction Project. Then, in January 2020, HSBC announced that it would join Standard Chartered Bank and not participate in the syndicated loan supporting the 1980MW Vinh Tan 3 Coal-Fired Power Plant Construction Project. It did so on environmental grounds. Then, in February 2021, Mitsubishi Corporation announced that it was withdrawing from the project, which was reportedly the first time it had ever withdrawn from a coal-fired plant project. As of September 2020, the 1980MW Vinh Tan 3 Coal-Fired Power Plant Construction Project had still not entered the construction stage and the power plant was expected to be operational in 2024.
Staff comments
1. The Chinese project title is 越南永新三期火电总承包项目 or 越南永新三期3×660MW火电总承包项目 or Vinh Tan三期進行項. The Vietnamese project title is Nhiệt điện Vĩnh Tân 3 or Nhà Máy Nhiệt Điện Vĩnh Tân 3. 2. No sources explicitly state that this loan was an export buyer's credit. AidData assumes this is the case for the following reasons: (1) it is denominated in USD, (2) the borrower is foreign, (3) it was partially financing the commercial contract, and (4) Sinosure provided export credit insurance. 3. OneEnergy Ventures Limited is a joint venture between Hong Kong-based CLP Holdings and Diamond Generating Asia (DGA), a subsidiary of Japan’s Mitsubishi Corporation. 4. In the Overseas Development Finance Dataset that Boston University’s Global Development Policy Center published in December 2020, it identifies a $200 million China Eximbank loan for this project. However, AidData has not yet independently confirmed China Eximbank’s participation in the loan syndicate. This issue requires further investigation. 5. It is not clear if this loan was collateralized. This issue warrants further investigation. According to one source (https://www.iflr.com/article/b1lp1tjcln8wxj/2018-project-finance-report-vietnam), "lenders [that support PPP projects] commonly face a number of restrictions when securing their loans with assets located Vietnam. In particular, [...] land use rights and assets attached to the land can only be mortgaged to licensed Vietnames credit institutions. In the context of major infrastructure projects (for example, thermal power plants), the project company would typically mortgage the land use rights and assets attached to the land to a licensed credit institution within the syndicated on behalf of the lenders. Lenders would obtain comfort from this structure through a government guarantee issued by the Government, supported by a confirmation by the State Bank of Vietnam, a legal opinion issued by the Ministry of Justice (MOJ) and by specific acknowledgments and consents issued by the relevant Ministries and key local authorities involved in the project. 6. The individual contributions of China Development Bank, China Construction Bank, Industrial and Commercial Bank of China, China Bank of Communications, and Bank of China to the $2 billion syndicated loan are unknown. For the time being, AidData assumes equal contributions ($400 million) across all five known members of the syndicate.