Newsletter
Vietnam Infrastructure Spotlight - April 2023
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 our Vietnam M&A Spotlight, Vietnam Environment Spotlight or Vietnam Competition Law Spotlight.
MARKET UPDATES
PPP
- Seesaw. Economists and policymakers have voiced their support for raising the State's contribution cap in public-private-partnership (PPP) infrastructure projects to 65 per cent (from 50 per cent). Source: Vietnam News
Power
- Jacked up again. Electricity of Vietnam (EVN) has once again proposed to increase electricity prices to combat losses that may reach VND93 trillion (nearly US$4 billion) in 2022 and 2023. Despite efforts to save costs by optimising cash flow, mobilising hydroelectric power and reducing high-cost thermal power sources, EVN recorded a total loss of nearly VND29 trillion in 2022. Source: Bizhub
- Coal continues. Ha Tinh People’s Committee proposed to the Ministry of Natural Resources and Environment (MoNRE) to switch an additional 21.6ha of agricultural land for use as non-agricultural land for the development of the Vung Ang II thermal power plant. Source: Vietnam Investment Review
- Coal cancelled. Authorities in Quang Tri have informed EGATi of their decision to terminate the Thai electricity firm’s 1,320MW coal-fired power project. EGATi called off its proposed coal-fired project last October because of a lack of funding and Vietnam’s carbon-neutral target by 2050. Quang Tri has sent a proposal to the Prime Minister to shift the project to natural gas or LNG. Source: The Investor
Renewable energy
- In a pickle. Solar and wind energy developers whose projects were too late to benefit from generous feed-in tariffs want a temporary tariff of 6.2 cents per kilowatt hour while waiting for the authorities to finalize a higher tariff. There are 84 renewable projects in Vietnam with a total capacity of over 4,676MW per hour that failed to meet the cut-off date and are in this category. These developers are not interested in the low price that EVN is offering. Source: VN Express International
- In the sun. SP Group of Singapore has acquired 100 megawatts-peak (MWp) of solar power farm assets in central Phu Yen province. The company did not disclose the acquisition price. The deals mark SP’s first investment in solar farm assets in Vietnam. It plans to invest in 1.5GW of utility-scale and rooftop solar projects by 2025. Source: The Investor
- In funds. Thai solar farm operator Super Energy Corp. plans to invest 41.5 billion baht (US$1.2 billion) to fund renewable developments in Thailand and Vietnam between 2023 and 2025. Most of the 2023 spending is earmarked for the development of wind farms in Vietnam, including a 30MW offshore project in Soc Trang and a 70 MW near-shore wind farm in Bac Lieu. Source: The Investor
LNG
- Haggle. Three years after its approval, construction of the US$4 billion Bac Lieu LNG-to-power plant has not begun due to a disagreement in electricity selling price. EVN and the investor, Singapore’s Delta Offshore Energy, have held nine rounds of negotiations but failed to agree on the rate. The plant, with a capacity of 3,200MW, would be the biggest foreign project in the Mekong Delta. Source: VN Express International
Oil & Gas
- Hope springs eternal. Leaders of the Quang Tri provincial People's Committee have recently worked with a joint venture of investors from Laos, Vietnam and the U.S. in order to build an oil refinery in the Southeastern Quang Tri Industrial Park. The project would cover an area of around 100ha. Source: VOV
- Voice of experience. Construction of the US$5.4 billion Southern Petrochemical Complex in Ba Ria-Vung Tau province might be delayed if problems with investment incentives, mainly tax-related, are not resolved. Long Son Petrochemicals Company told the Ministry of Finance and the Ministry of Planning and Investment that the work is in the final stages and the plant is slated to begin operation this year, but it has yet to receive the investment incentives it had been promised. Source: VNExpress International
- Worried. The O Mon 3 gas-fired power plant project in southern Vietnam might not be able to receive the first gas flow from Block B in the fourth quarter of 2026 as scheduled, due to problems related to official development assistance (ODA) procedures. The US$1 billion project has received about US$400 million in reciprocal capital from EVN. The other 60 per cent is set to be sourced from Japanese ODA. Source: The Investor
- No worries. South Korean petroleum exploration firm SK Earthon expects to start crude oil production from 15-1/05 Block in the Cuu Long basin off southern Vietnam in 2025. SK Earthon is in the process of securing approvals from the Vietnamese government. Source: The Investor
Aviation
- Attention please. Bamboo Airways, a subsidiary of Vietnamese private firm FLC, confirmed that the airline had found a new investor to replace the old shareholders, former FLC chairman Trinh Van Quyet and other shareholders. Bamboo Airways is in the negotiation phase with the new investor. Source: Bizhub
- Overshooting the runway. Airports Corporation of Vietnam (ACV), the investor of Long Thanh International Airport, has proposed delaying the completion of the essential facility component of the project until 2026 instead of 2025 as initially planned. The proposal is subject to approval by the Ministry of Transport. If approved, construction time will be extended by an additional six months. Source: Vietnam Investment Review
Road
- Better late than never. Seven of the eleven North-South Expressway projects, with a total length of 411.6km, will be completed and put into operation this year. They are part of the first phase of the project, which was planned for the 2017-2020 period. Source: Vietnam News
Seaports
- Deep partnership. APM Terminals, a part of A.P. Moller – Maersk, last month announced a strategic partnership with HATECO Group in Vietnam involving the development of two new deep-water berths at Lach Huyen Port north of Haiphong. As part of this partnership, APM Terminals will provide financial, operational, and technical support to HATECO with the aim of facilitating direct imports and exports between Vietnam's north and European and American markets. Source: Vietnam Investment Review
Natural Resources
- Rare earth. Vietnam has signalled its intentions to play a role in the global rare earths supply chain. According to official data, Vietnam is estimated to have about 22 million tons of rare earth reserves, mostly in the north. Source: The Investor
