Project Financing for Vung Ang 2 Coal-Fired Power Generation Project in Vietnam
Supporting Power Development Project under the Growth Investment Facility
- Region: Asia
- Overseas Investment Loans
- Project Finance
The Japan Bank for International Cooperation (JBIC; Governor: MAEDA Tadashi) signed on December 28 a loan agreement with Vung Ang II Thermal Power Limited Liability Company (VAPCO), a Vietnamese company invested in by Mitsubishi Corporation and others. JBIC will provide project financing*1
amounting to up to approximately USD636 million (JBIC portion) for the Vung Ang 2 coal-fired power plant in the Socialist Republic of Viet Nam (Vietnam), under JBIC's Growth Investment Facility*2
. The loan is co-financed with private financial institutions as well as the Export-Import Bank of Korea (KEXIM). The total co-financing amount is approximately USD1,767 million.
In this project, VAPCO will build, own, and operate an ultra-supercritical coal-fired power plant with an installed capacity of 1,200MW (two units of 600MW each) in the Vung Ang district, Ha Tinh province in central Vietnam. The electricity generated from this plant will be sold to Vietnam Electricity (EVN), the country’s state-owned power utility company, for 25 years.
This project is seen as one of the concrete initiatives to strengthen cooperation between Japan and Vietnam in the energy field, as addressed in the Japan-Vietnam Joint Statements issued following the summit meetings held on June 6, 2017 and May 31, 2018. In its Export Strategy for Infrastructure Systems revised in July 2020, the Japanese government expressed its intention to expand the export of infrastructure systems, including the design, construction, operation, and management of infrastructure, as well as increasing investments in overseas businesses.
The Vietnamese government has prioritized the improvement of power supply capacity and revised its Seventh Power Development Plan, which was announced in 2011, in 2016 in order to promote the construction of power plants and swiftly develop power sources. This project conforms to the Plan and is also expected to contribute to economic development in Vietnam through the stable supply of electricity as a base load power source in the 2020s and beyond. JBIC has been working with Vietnam on its energy policy transition towards decarbonization. Based on such engagement, JBIC will support this project.
As Japan's policy-based financial institution, JBIC will continue to support the overseas infrastructure business expansion of Japanese companies by drawing on its various financial facilities and schemes and by performing its risk-assuming function.
Project finance is a financing scheme in which repayments for a loan are made solely from the cash flows generated by the project.