Resolving difficulties for gas-fired power projects

Thi Vai liquefied natural gas warehouse and terminal complex

To Xuan Bao, Director of the Electricity and Renewable Energy Authority under the Ministry of Industry and Trade (MoIT), said that under the Power Development Plan VIII, 23 gas-fired power plants will be built and put into operation from now to 2030. Among these, 10 plants will use domestic gas and 13 plants will use liquefied natural gas (LNG) for electricity generation.

So far, the 660MW O Mon Thermal Power Plant I has been put into operation. The Nhon Trach 3 and Nhon Trach 4 power plants with combined capacity of 1,624MW, and the 1,200 MW Hiep Phuoc LNG Power Plant (phase 1) are under construction. All the power plants using domestic gas are in the preparation stage for investment. Among them, the 1,050MW O Mon II project has been approved, and the O Mon IV project has been submitted by the Vietnam Oil and Gas Group (PVN) to the Commission for the Management of State Capital at Enterprises for approval.

Three LNG power plant projects have not yet selected investors, namely Nghi Son, Ca Na, and Quynh Lap, of which the Nghi Son project has been approved. Other power plant projects have secured investors and are in the preparation stage for investment. Some projects have submitted feasibility study (FS) reports to the MoIT for approval. The Electricity and Renewable Energy Authority has sent documents to the investors requesting the completion of FS reports for the Son My I, Son My II, Quang Ninh, and Hai Lang (Phase 1) projects. The LNG Bac Lieu and LNG Long An projects (I and II) have been appraised by the Electricity and Renewable Energy Authority.

Projects currently negotiating Power Purchase Agreement (PPA) contracts with EVN include Nhon Trach 3 and 4, Hiep Phuoc (Phase 1), O Mon II, and Bac Lieu. According to investor reports, these projects are facing difficulties in the negotiation process and have not been able to sign PPA contracts for investors to arrange funding.

According to To Xuan Bao, the preparation of investment in thermal power projects in general and gas-fired power projects in particular shows that the construction timeline for combined cycle gas turbine units, from being entrusted to the investor to being put into commercial operation, requires a minimum duration of 7.5 years.

The gas-fired power projects that can be put into commercial operation before 2030 include projects within the O Mon Power Center, Nhon Trach 3, Nhon Trach 4, and Hiep Phuoc. The total capacity of these projects is 6,634MW. Other projects can only be operational by 2030 if they successfully complete PPA negotiations and secure financing arrangements before 2027. The gas-fired power projects within the gas-to-power chain (Lot B, Blue Whale) also depend on the progress of the upstream projects to ensure the overall effectiveness of the entire project chain.

According to the leaders of the Electricity and Renewable Energy Authority, the implementation of gas-fired power projects is facing some difficulties and obstacles related to PPA contracts, government guarantees, and the LNG procurement mechanism, as reported by investors and local authorities. Notably, certain provisions of Vietnam’s Bidding Law are not compatible with international practices related to trade in LNG. Therefore, Vietnam should put in place regulations on LNG procurement for LNG power plants that are in line with international practices.

EVN has recommended that the MoIT amend the regulations in Circular 25/2016/TT-BCT and Circular 45/2018/TT-BCT, and report to relevant authorities for consideration and resolution.

The Electricity Regulatory Authority of Vietnam under the MoIT is studying a report to propose amendments to the regulations in the two circulars in order to resolve the obstacles and facilitate the signing of PPA contracts by investors and EVN, enabling the arrangement of funds for and implementation of LNG power projects. However, any amendments to these circulars must be based on a comprehensive assessment of impacts such as electricity prices, the electricity market, and other relevant regulations. In cases the issues exceed their jurisdiction, the MoIT will report to the Prime Minister and relevant authorities for guidance and resolution.

Concluding the meeting, Minister Nguyen Hong Dien emphasized that the development of gas-fired power, as outlined in the Power Development Plan VIII, is essential and plays a crucial role in ensuring electricity supply for the economy and promoting energy transition in Vietnam. Therefore, it is necessary to identify the root causes in order to resolve difficulties and obstacles in the development of gas-fired power.

Minister Nguyen Hong Dien suggested that EVN study foreign investors’ proposal regarding long-term production commitment and report to the Government difficulties, obstacles, proposed solutions, and request the Government’s consideration of mechanisms and policies to resolve obstacles in implementing gas-fired power projects under the Power Development Plan VIII.