Buyer's Credit for Vietnam Electricity (EVN)
Supporting Export of Facilities for Vietnam's First Ultra-Supercritical Coal-fired Power Plant
- Region: Asia
- Export Loans
The Japan Bank for International Cooperation (JBIC; Governor: Akira Kondoh) signed on March 31 a loan agreement on buyer's credit (export loan) totaling up to approximately USD50 million (JBIC portion) with Vietnam Electricity (EVN). The loan is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd. (lead arranger), bringing the total cofinancing amount to approximately USD84 million. Nippon Export and Investment Insurance (NEXI) provides insurance for the portion cofinanced by the private-sector bank.
This loan is intended to finance EVN's purchase of a whole set of machinery and equipment including steam turbines (manufactured by TOSHIBA CORPORATION) from a consortium comprising Mitsubishi Corporation and other companies to build an ultra-supercritical*1
coal-fired power generation plant (600 MW x 1 unit) adjacent to a coal-fired power plant, which is financed by JBIC*2
and currently under construction, in Binh Thuan Province, Southern Vietnam.
In Vietnam, demand for electricity is rapidly increasing backed by steady economic growth, but the construction of necessary power plants has not been catching up with the demand, causing the country to face supply constraints. It has become particularly urgent to solve the problem of power shortages in Southern Vietnam. In response to this situation, the Vietnamese government has set the enhancement of power supply capacity as a national priority, and, in 2016, revised the National Power Development Masterplan (announced in 2011) in order to accelerate power source development by promoting construction of power plants, taking into account the effective use of the country's resources. This project therefore follows the revised masterplan which includes increasing power supply capacity in Southern Vietnam. Through JBIC's support for exporting the whole set of steam turbines and other equipment made by Japanese companies, this loan is expected to advance Vietnam's economic development through steady power supply, as well as contribute to maintaining and strengthening the international competitiveness of Japanese companies.
This is Vietnam's first ultra-supercritical coal-fired power plant project. The Japanese government positions the ultra-supercritical coal-fired power generation technologies as technologies vital for "quality infrastructure" in the Partnership for Quality Infrastructure (announced in 2015). Furthermore, Prime Minister Abe announced Japan's cooperation with Vietnam in introducing efficient and environmentally-friendly coal-fired power generation at the Japan-Vietnam Summit Meeting held in January of this year. This project is thus in line with the aforementioned initiative of the government.
- As Japan's policy-based financial institution, JBIC will continue to support Japanese companies' overseas infrastructure business deployment, by drawing on its various financial facilities and schemes for structuring projects and performing its risk-assuming function.
- *1 This technology is categorized as "ultra-supercritical" according to the OECD unclassified document TAD/PG(2016)1 - Annex VI, which reflects sector understanding on export credits for coal-fired electricity generation projects agreed in November 2015.
- *2 JBIC signed on July 17, 2014, a loan agreement with EVN to finance funds for purchasing steam turbines and other equipment necessary for a coal-fired power plant construction project in Binh Thuan Province. See Press Release on July 17, 2014, for further details.