Vietnam Infrastructure Spotlight - January 2024
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We are pleased to share the article in Vietnam Investment Review co-authored by Eric Johnson, and Duong Bao Trung of our Hanoi office. In Vietnam’s Power Development Plan VIII (PDP8), ambitious targets have been set for the development of renewable energy in the country. In order to meet these targets, significant amounts of private investment will need to be deployed, and Eric and Trung have discussed some of the key areas in need of improvement. Source: Vietnam Investment Review
The Law on Telecoms
The new Law on Telecoms was approved in November 2023 with an aim to promote Vietnam’s digital infrastructure. The new law stipulates new regulations on the management over data centre, cloud computing and basic telecommunications services on the internet which are in line with the development trend in the telecommunications sector and the convergence of telecommunications and IT. Stay tuned for our views on key aspects of this new law. Source: Vietnam Ministry of Information and Communications
Inspection of power projects
On December 25 2023, the Government Inspectorate announced the conclusion of the inspection of management and investment in construction of power projects according to PDP VII and adjusted PDP VII. The power projects under such an inspection included solar, wind, hydro and LNG power projects.
In particular, the results showed the capacity of solar power projects in Vietnam has exceeded a government-approved plan by 10-fold. The Ministry of Industry and Trade has by itself approved 114 projects and asked the Prime Minister (PM) to greenlight another 54 projects to be added to the PDP VIII. But of these 168 projects, none has any legal ground to be added to the plan.
These violations have resulted in 8,600 MW of solar power being connected to the grid by the end of 2020, 10 times the approved plan. These projects, although approved on false legal ground, were still eligible for the incentive feed-in tariff of 8.38 U.S. cents per kilowatt-hour for 20 years.
The surge in solar power capacity in the central and central highlands was not matched by an improvement in transmission capacity, which led to an overload of power in some localities such as Ninh Thuan, Binh Thuan, Phu Yen, Gia Lai and Dak Lak, where solar power plants were forced to run below capacity.
Similar violations were discovered in rooftop solar power. The total capacity of solar rooftop surpassed 16,500 MW by the end of 2020, 19 times the approved plan. Source: VN Express International
Carbon credit market
- Potential. The Vietnam Government has requested the establishment of a carbon credit market in Vietnam as part of the country’s efforts to cope with climate change. A market will be piloted in 2025 and operate officially in 2028, contributing to forest development and conservation, while facilitating the country's fulfilling its international commitment to net-zero emissions. It is a must for Vietnam to build a trading floor for carbon credits and quotas along with relevant regulations so that the domestic carbon market can operate effectively and connect itself with regional and global carbon markets. Source: Vneconomy and Tuoi Tre
- Growth. Vietnam sees strong growth of data centres. Vietnam Posts and Telecommunications Group (VNPT) inaugurated its eighth and largest data centre at the Hoa Lac High-Tech Park on 25 October 2023, marking a significant leap in Vietnam's data infrastructure capacity. Spanning an impressive 23,000 square metres and equipped with 2,000 rack cabinets, Hoa Lac Data Centre is the largest facility of its kind in Vietnam and represents a substantial investment in the country's technological infrastructure. Source: Vietnam Investment Review
- Never let a good roof go to waste. Electricity Vietnam (EVN) has just announced the purchase price of electricity from rooftop solar power systems in 2024. Issuing the purchase price of rooftop solar power is an important policy of the Government to encourage the development of rooftop solar power. Source: Vietnam Energy
- Entry. Two foreign companies from Singapore and Taiwan are looking to invest in two solar energy ventures in the central province of Quang Tri. On 3 January 2024, Quang Tri Department of Planning and Investment said that it had sent a document to Quang Tri People's Committee seeking opinions on the potential capital contribution and share purchase. Source: Vietnam Investment Review
- Exit. Vietnamese investment management firm VinaCapital is considering the sale of SkyX Solar in a deal that could value the Ho Chi Minh City-headquartered solar rooftop power developer at over US$100 million. It is reported that VinaCapital is in talks with a financial advisor to explore the sale of the renewable energy company it started in 2018. Source: Reuters
- Not going anywhere soon. The development strategy of the coal industry to 2030 with a vision to 2045 has been approved by Deputy Prime Minister Tran Hong Ha in Decision No 55/QD-TTg, under which coal output is expected to be between 45 and 50 million tonnes by 2030, and between 38 and 40 million tonnes in 2031-2045. Under the strategy, the industry will focus on exploration for upgrading existing coal resources along with new coal mines. Source: Vietnam Plus
Oil & Gas
- Taking the plunge? Saudi Aramco, the world’s largest oil producer, has expressed interest in building a petrochemical plant in Vietnam, which has been a net energy importer for years. Aramco, which is active in Asia–Pacific, provides crude oil for companies in Vietnam but has yet to initiate a direct investment in the Southeast Asian country. Source: The Investor
- Mayday. The PM has asked the Japan Bank for International Cooperation (JBIC) to get involved in the restructuring of loss-making Nghi Son Refinery and Petrochemicals LLC (NSRP), the second oil refinery in the country. At the meeting with JBIC in Tokyo, the PM asked the bank to lower interest rates on existing loans and provide softer loans to help the refinery ease financial burden. Source: The Investor
- Japan. The Party Committee of Thai Binh province has given an in-principle nod to the US$2 billion LNG Thai Binh thermal power plant in Thai Thuy district backed by Tokyo Gas and other investors, and asked relevant authorities to help investors and speed up site clearance progress, aiming to kick off the project close to the provincial Party Committee’s 21st Congress scheduled for 2025. The plant will cover 269.4 hectares and have two turbines with a combined capacity of 1,500 MW. Source: The Investor
- Thailand. Thailand’s Gulf Energy is looking to build an LNG power centre in Nam Dinh and cooperate with South Korea’s Taekwang Power on a project in the same province. The company is exploring a 1,500-3,000MW LNG power centre project and an LNG terminal capable of accommodating ships of up to 200,000 cubic meters. Gulf Energy urged Nam Dinh authorities to connect the company with Taekwang Power to transform the latter’s project from a coal-fired power plant to an LNG-fired power plant. Source: The Investor
- South Korea. South Korea’s GS Energy, a co-investor in two 1,500 MW LNG-to-power plants in the Mekong Delta province of Long An, plans to put them into operation in 2028. At the meeting with EVN, GS Energy also requested the utility’s help in implementing and operating the Long An 1 and Long An 2 plants. Source: The Investor
- Staying aloft. In a recent meeting addressing the concerns of Bamboo Airways, Deputy PM Le Minh Khai instructed the airline to proactively review and construct a practical restructuring plan. Relevant ministries are also urged to consider providing support. The carrier is now facing losses and debts due to various difficulties. Source: VN Express International
- Flying high. The balance of power in Vietnam's aviation industry is shifting as low-cost carrier Vietjet looks likely to eclipse state-run Vietnam Airlines in international passenger numbers and may become the overall market leader. Vietjet, Vietnam's first private-sector commercial airline, started flying in 2011. Source: Nikkei Asia
- Full steam ahead. The Ministry of Transport (MOT) has proposed an amendment to the Law on Railways to increase the state’s capital contribution to railway projects implemented under private-public-partnerships (PPP) from 50 per cent to 80 per cent. The ministry believes that it is necessary to amend the Law on Railways to make railway projects more attractive to investors. Under current laws, state capital in PPP railway projects account for no more than 50 percent of total investment of the projects. Source: Vietnam Net