Eager to invest in the electricity industry, many investors are concerned about the challenges they face in implementing large electricity projects recently.
 |
| Nhon Trach 1 Gas Power Plant. Photo : Duc Thanh |
It is not easy to choose investors through bidding.
The Nghi Son LNG Power Plant project has recently decided to cancel the invitation to bid and stop the selection of investors. The reason explained by the Management Board of Nghi Son Economic Zone and Industrial Zones of Thanh Hoa province is to implement the provisions of Article 73, Decree No. 115/2024/ND-CP detailing a number of articles and measures to implement the Law on Bidding on the selection of investors to implement investment projects using land.
Previously, the Project conducted a limited international bidding in July 2024 and announced the closing time for bidding as 2:00 p.m. on September 30, 2024, and the opening time as 3:00 p.m. on September 30, 2024. As of August 1, 2024 - the time limit specified in Decree 115/2024/ND-CP - no investors have submitted bidding documents or proposals, so the guidance of Article 73 must be followed and the selection of investors must be stopped.
Experts monitoring the electricity industry believe that LNG power projects that have not yet selected investors, such as the Nghi Son LNG Power Plant, also face challenges in the bidding process when they must follow the regulations set forth in Decree 115/2024/ND-CP. Accordingly, the bidding documents prepared in accordance with the law mention the draft power purchase agreement (PPA) agreed upon with the power buyer - in this case, the Vietnam Electricity Group (EVN).
An investor operating under the BOT model in Vietnam asked, who will negotiate to draft the PPA in the bidding documents? If the PPA is general, then later on when negotiating specifically, the investor will still spend a lot of time. But if the PPA has specific terms for that project, the investor will have to revise it closely.
According to the above person, ignoring investors with other goals and presenting a valid bidding document whose feasibility is unknown, for investors who really want to do it, the calculation to meet the conditions of the inviting party is that the draft PPA is agreed with EVN, which requires a lot of time and money.
“Investors must do a feasibility study report to come up with specific parameters for PPA negotiations, in order to determine the project’s cash flow and profit or loss. Thus, the minimum investment amount is about 1.5 million USD, and the maximum amount is several million USD. For the winner, this amount is included in the project development cost, but if the winner fails, this is not a small amount. Not to mention that several companies are bidding at the same time, so doing so would be a waste,” he commented.
Following the story of the bid cancellation at the Nghi Son LNG Power Plant Project, experts said that in order to make the FS, the contractor must have a policy to send people and equipment to survey, otherwise it will be difficult. "So does the province agree with the policy of many investors to survey the project on the same piece of land, because this is not easy," a contractor asked.
Inconsistent regulations
Nguyen Duy Giang, Deputy General Director of the PetroVietnam Power Corporation (PV Power), said that the selection of investors for power projects needs to be resolved quickly, and that provinces with planned power projects are actively working to select investors. However, since the promulgation of the Power Plan VIII and the Power Plan VIII implementation plan, no province has yet completed its selection due to the lack of specific guidance and regulations.
The Draft Law on Electricity (amended) – being discussed by the National Assembly at its 8th Session – provides more specific regulations on the selection of investors for power projects (Articles 26 to 28) on the principle that the ceiling price for electricity is within the price frame issued by the Ministry of Industry and Trade in the year of bidding and the principle of determining the electricity price accounts for a large weight of points (point d, clause 1, Article 26).
However, at this time, the investor has not yet established the FS, and does not know how to commit to the annual electricity output (Qc), so there is not enough basis to commit to the price. "According to PV Power's experience in negotiating power purchase contracts, although the draft contract and the principles for calculating electricity prices have been specifically regulated by law (in Circular 07/2024/TT-BCT), the negotiation time for the power purchase contract will not be less than 2 years, even 5 years, and the official price will not be agreed upon," Mr. Giang shared.
Determining time frames that are too short compared to reality will make implementation difficult, investors cannot commit to progress and are concerned about participating in bidding to select investors for power source projects when they see risks of project revocation due to failure to meet progress (Article 17 of the Draft).
On the other hand, it can be seen that between Decree 115/2024/ND-CP and the Draft Law on Electricity (amended), there are inconsistencies in the regulations related to investor selection, which if not unified, will create challenges in the process of electricity deployment.
A series of LNG power projects in other localities such as Quang Ninh, Long An, Bac Lieu, Binh Thuan... have selected investors for development, but so far they have not dared to start construction because they have not completed PPA negotiations.
During the discussion session at the National Assembly on November 7 on the Draft Law on Electricity (amended), Minister of Industry and Trade Nguyen Hong Dien mentioned that "the Electricity Plan VIII has been announced for nearly 1.5 years, but up to now, no new investor has proposed a project". The reason is said to be the lack of specific and clear regulations on mechanisms and policies.
Meanwhile, the requirement is that Vietnam's power system, with a scale of 80,000 MW, will have to increase to 150,524 MW by 2030. "If we do not promptly amend, supplement, and issue appropriate and feasible mechanisms and policies, there will certainly be no investors and thus we will not be able to meet the country's energy needs," said Minister Dien.
Source: https://baodautu.vn/dau-tu-du-an-dien-sau-hao-huc-la-thach-thuc-d229644.html
Comment (0)