China Development Bank contributes $673 million to $844 million syndicated buyer's credit loan for 1200MW Vung Ang 1 Coal-Fired Power Plant Construction Project

On April 22, 2011, a bank syndicate, including China Development Bank (CDB), and Vietnam National Oil and Gas Group (PetroVietnam), a state-owned company, signed an $844 million buyer's credit loan (BCL) agreement for the 1200MW Vung Ang 1 Coal-Fired Power Plant Construction Project. CDB contributed $673 million to the syndicated loan facility. The estimated borrowing terms of the loan were as follows: 13- to 15-year maturity and 3-year grace period. The interest rate is unknown. By the end of 2013, CDB had disbursed $571 million. Besides CDB, the other loan syndicate members included: Hong Kong and Shanghai Banking Corporation Limited (HSBC), Bank of Tokyo-Misubishi UFJ (part of MUFG Bank, a Japanese group), Credit Suisse AG (Credit Swiss), and Intesa Sanpaolo S.p.A Singapore Branch (an Italian group). Furthermore, Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corporation separately issued a $95 million loan for this project. The Vietnam Ministry of Finance issued a sovereign guarantee in support of the syndicated loan involving CDB. Euler Hermes Kreditversicherungs-AG (Hermes) and Sinosure provided buyer’s credit insurance. The borrower was to use the proceeds of the loan to partially finance a $1.17 billion EPC contract signed on April 9, 2009 with Vietnam Machine Installation Corporation (or Tổng Công Ty Lắp Máy Việt Nam or Lilama). The 1200MW Vung Ang 1 Coal-Fired Power Plant Construction Project was implemented as an Independent Power Project (IPP) and financed according to a debt-to-equity ratio of 70:30. The purpose of the project was to construct a 1200MW coal-fired power plant — with two, 600MW power generation units (Unit 1 and Unit 1) — in Kỳ Lợi Commune, Kỳ Anh District, and Hà Tĩnh Province (exact locational coordinates: 18.09792, 106.38123). Lilama — a Vietnamese state-owned enterprise — was the general EPC contractor responsible for implementation. Construction began in August 2009. Unit 1 was completed in December 2014 and Unit 2 was completed in May 2015. The power plant was officially put into operation on September 17, 2015. Unit 1 subsequently had problems with its turbine. A new rotor was installed in 2016. Then, in February 2017, local residents blocked the road leading to Vũng Áng-1, saying that coal trucks moving along the road were causing pollution. The local government said it would write to Vinacomin and call for the suspension of coal trucks.

Additional details

1. The Chinese project title is 火电厂永昂一期建 or 越南永岸电厂一期项目. The Vietnamese project title is Nhiệt điện Vũng Áng 1 (2x600MW) or Nhà máy điện Vũng Áng 1 or Nhà máy Nhiệt điện Vũng Áng 1. 2. According to PetroVietnam's 2011 Annual Report (source #84295), the CDB loan carried a "term from 13 to 15 years, including a grace period of 3 years" (p. 70). For the time being, AidData estimates the maturity of loan by taking the median (14) of the 13-15 year range. 3. PetroVietnam's 2011 Annual Report (source #84295) says this syndicate was only comprised of four banks: HSBC, CDB, MUFG, and Credit Swiss (p. 70). The Italian banking group, Intensa Sanpaolo S.p.A Singapore Branch is not included in this official document-- only in media reports.

Number of official sources

11

Number of total sources

18