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Vietnam Infrastructure Spotlight - March 2021

Freshfields' Vietnam Infrastructure Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive either our Vietnam M&A Spotlight or our Vietnam Competition Law Spotlight.


More power; fresher air

In February 2021, the MOIT released the draft National Power Development Masterplan for the period 2021-2030 with a vision to 2045 (PDP8) for public comments. The draft is about 1,000 page long including around 200 pages of appendices.

The main theme is to ensure a sufficient power supply to fuel economic growth while minimising environmental impact. Most significantly, the planners envisage less coal power and more renewable energy.

The draft expects that total electricity demand in the north will increase faster than in the south and will overtake it in 2045. More conservative demand projections are attributed to slowing GDP growth in the country as a whole; and changes in relative demand are attributed to different rates of GDP growth between the north and the south. 

The installed power capacity of the country will be 137GW in 2030 compared to 70GW in 2020.

  • The role of coal in total power capacity will reduce from 34% in 2020 to 27% in 2030, with no new projects to be mandated after 2025.
  • Gas (domestic gas and LNG) will account for 23% in 2030, up from 15% in 2020. No LNG projects are planned for operation before 2025. LNG projects already approved in the former PDP7 are planned for operation before 2030 with additional projects proposed for 2035. PDP8 confirms the need for import of LNG in the coming decade to fuel gas plants when domestic gas is insufficient or unavailable.
  • PDP8 prioritises wind energy. Wind power capacity is expected to increase from 600MW in 2020 to 19GW in 2030, accounting for about 13% of the national capacity. That is an increase of about 1,700%.
  • Solar power will grow at a more leisurely rate, rising to 20 GW in 2030 (14% of the total installed capacity in 2030).
  • The remaining 23% capacity will largely be hydro.

Investors in power generation should consider the slower power demand growth prediction in making investment decision to avoid curtailment risks.

The draft emphasises the need to develop more interconnection and transmission infrastructure to transmit power from the central region to the north and south of the country. This is to accommodate the increase in development of renewable energy in the central provinces.

Over the next 10 years, Vietnam will need about US$9.5 billion per year for power generation investment and US$3.2 billion per year for transmission infrastructure. EVN has faced various challenges during the 2010-2019 period in raising funds domestically or through sovereign borrowing, mostly due to restrictions on public debt and constraints imposed by EVN’s financial position. From 2019, most of the financing has come from international commercial debt. This means that foreign investment and international commercial financing will be inevitable in the power sector. The draft PDP8, however, does not suggest solutions to overcome the hurdles in attracting such financing.

New Circular - not so new PPA

Circular 57 of the Ministry of Industry and Trade took effect on 22 February 2021. Circular 57 sets out the mechanism to determine tariffs for grid-connected power projects with a capacity of over 30MW (other than renewable and BOT projects) and provides a template PPA.

The template PPA in Circular 57 (which is similar to the template under the prior Circular 56 and template PPAs currently used in wind and solar projects) can be used by thermal power projects developed by State-owned companies such as EVN, PVN or Vinacomin. Those projects were financed by the State or received preferential or commercial loans with payment guarantees by the State. The terms of the template PPA focus on the sale and purchase of electricity without taking into account commercial financing or bankability issues. For examples the template contains no provisions on take-or-pay, termination payments, change-in-law protection or international arbitration.

Circular 57 would apply to large-scale IPPs including LNG-to-power projects. However, based on the template PPA, such projects would not be bankable, at least on the international markets. Further consideration of the Circular is therefore likely at some point in time.

Better late than sorry

On 5 March 2021, the MOIT established a taskforce to inspect the development and operation of solar power projects (including grid-connected and rooftop plants) in all provinces during the period from July 2019 to the end of 2020. This follows the Prime Minister’s instruction in February 2021 to examine the development and operation of solar power projects to “address any violations and conduct that takes advantage of the policies for [unjust] benefits;” and to develop appropriate policies for development of renewable energy “to avoid curtailment or cause economic loss to investors.”



  • Cold shoulder. Although Power Generation Corporation 2 (EVN GENCO2) owns substantial interests in several thermal and hydropower plants, 99.97 per cent of the shares offered at its IPO were not sold. EVN GENCO2 owns too many subsidiaries. Buying stakes in the plants one by one will help investors limit risks. Source: Vietnam Investment Review
  • Coal appreciation. Prime Minister has authorised the construction of the 1,200MW Quang Trach II thermal power plant in the central province of Quang Binh. This is a key project in the energy sector with an investment capital of US$2.1 billion funded by EVN. The MOIT had earlier warned of power shortages of 3.7 billion kWh in 2021 and nearly 10 billion kWh the following year, as construction of new thermal and gas-fired plants has fallen behind schedule. Source: VN Express International
  • Coal aversion. Mitsubishi Corporation has decided to pull out of the 2GW Vinh Tan 3 thermal power plant project in Binh Thuan province, as it shifts away from carbon intensive businesses in the face of climate change. Mitsubishi’s move to exit the US$2 billion project shows Japanese companies and financiers dropping their once-strong support for coal amid pressure from shareholders and activists. Mitsubishi plans to invest in energy projects that have a lower environmental impact including LNG and renewable energy such as solar power. Source: Reuters


  • Shadow boxing. Despite the hardships caused by the COVID-19 pandemic, the South Korean Government and many South Korean firms have expressed their interest in investing in urban railway projects in HCMC. Lotte Properties and Lotte E&C expected to join some partners in investing in the city’s metro lines. Source: The Saigon Times

Oil & Gas

  • More please. Japanese giant energy group ENEOS Corporation has registered to buy 25 million shares of Vietnam’s largest petroleum distributor Petrolimex. The purchase is set to be made from 1-30 March through order matching. ENEOS previously acquired 1 per cent of Petrolimex last September, and JX Nippon Oil & Energy Vietnam, a subsidiary of ENEOS, currently owns 8 per cent stake. Source: Vietnam Plus

Renewable Energy

  • Here comes the sun. TNB Renewables Sdn. Bhd., a wholly-owned subsidiary of Malaysia’s largest utility company Tenaga Nasional Berhad, will acquire a 39 per stake in a 21.6MW power project comprising five rooftop solar plants in Vietnam from Singapore’s leading solar energy provider Sunseap Group. The acquisition will serve as a beachhead for TNB to establish a local presence in Vietnam. Source: Deal Street Asia
  • Riders on the storm. Foreign investors from the U.S. and Singapore are interested in either surveying or implementing wind farms in Lang Son province. Notably, General Electric from the U.S. expressed its interest in surveying two wind farms in this province. Source: Vietnam Investment Review