State-owned Vietnam Electricity (EVN) has signed a VND30.23 trillion ($1.31B) engineering, procurement and construction (EPC) contract for the 1.2 gigawatts (GW) Quang Trach 1 thermal power plant in Quang Binh province, Vietnam.
The total cost of the project is VND41.14tn ($1.8bn) with EVN bringing 30% of the capital funding and the rest coming from commercial loans, according to local press reports. It will be EVN’s first project using banks’ loans without government guarantees.
The EPC contractors include Vietnam’s No. 1 Construction Corporation, Mitsubishi Corporation of Japan and Hyundai Engineering and Construction of South Korea, who will complete installation of the first turbine of the plant in three and a half years and the second in four years.
Once completed, Quang Trach will supply up to 8.4 billion kWh of electricity to the national power system.
Infrastructure expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “There are some interesting aspects to this project. As one of the legacy coal fired power projects in Vietnam, the financing of Quang Trach 1 with a mix of Japanese and Korean in the EPC, may be one of the last in Vietnam as the country seeks to prioritise renewable energy with gas as a transition fuel. Further, unlike the independent power producer (IPP) led build–operate–transfer (BOT) coal fired power projects, the financing for this facility is led domestically, which may be reflective of the changes in the international financial community’s position on fossil fuel projects. There are some pragmatic reasons for taking this project forward, though in the long run we will no doubt see an increasing pivot away from coal.
The project began construction in 2011. In 2017, EVN replaced PetroVietnam as the developer due to slow implementation.
In April, EVN was given permission to exceed its loan ceiling for the Quang Trach 1 thermal power plant. It is understood that Vietnam’s government had given special exception for the project.
In February, the Vietnamese prime minister approved investment in the Quang Trach II thermal power plant project, which has a capacity of 1.2GW with a total preliminary investment value of approximately VND48.156 trillion ($2.1 bn). The first unit of Quang Trach II is expected to start commercial operations in 2028, and the second unit will follow in 2029.