The Ministry of Industry and Trade proposed that the Government establish an interdisciplinary working group to remove obstacles for LNG and offshore wind power projects to operate before 2030.
According to the Power Plan VIII, the capacity of 23 gas-fired power plant projects to be put into operation by 2030 is more than 30,420 MW, of which 13 plants use LNG, accounting for 74% of the total capacity. Currently, only O Mon I Thermal Power Plant (660 MW) has been put into operation in 2015, and one project under construction is Nhon Trach 3 and 4 Thermal Power Plant (1,624 MW). The remaining 18 projects are in the process of investment preparation (23,640 MW) and 3 are selecting investors (4,500 MW).
Offshore wind power will reach about 6,000 MW by 2030, according to Power Plan VIII. However, no project has been decided on in principle and assigned to an investor.
The Ministry of Industry and Trade is concerned that LNG and offshore wind power projects will have difficulty reaching commercial operation before 2030. This is because LNG power projects usually take 7-8 years to deploy, and offshore wind power projects take 6-8 years, while many policies for these two types of power sources are unclear.
In a recent report to the Prime Minister, the Ministry of Industry and Trade stated that the difficulties in developing projects are "very new issues, related to many competent authorities and ministries". Therefore, the Ministry proposed that the Prime Minister establish an inter-sectoral Government Working Group to study and propose mechanisms, policies, and amend regulations in a synchronous and feasible manner.
The obstacles in developing LNG power projects were mentioned by the energy management agency in a report sent to the Government . That is, the lack of legal basis for negotiating power purchase agreements (PPA) with long-term output commitment, and the mechanism for transferring gas prices to electricity prices. These are also the reasons why Nhon Trach 3 and 4 projects have completed 73% of the construction progress but have not yet completed negotiations and signed power purchase agreements (PPA) with EVN.
In addition, foreign investors have additional requirements, such as applying foreign law (UK or Singapore), Government guarantee of payment and contract termination by EVN, foreign currency conversion guarantee, risks related to the progress of connection and transmission projects.
The Ministry of Industry and Trade said that there are currently no regulations on minimum output commitments for factories participating in the electricity market. EVN and the investors of the factories negotiate and agree on output according to the contract.
However, this also leads to a situation where the committed output exceeds actual demand. In that case, the plant will not generate electricity but EVN will still have to pay for electricity, affecting the financial balance of this group. Therefore, the Ministry of Industry and Trade recommends that the Government assign ministries to develop financial mechanisms for EVN and PVN so as not to put pressure on electricity prices and burden EVN.
Regarding EVN's guarantee of obligations with the power purchase contract, according to the Ministry of Industry and Trade, this is a purely commercial contract between the investor and the enterprise, the Government does not perform this guarantee obligation. That is, the state-owned enterprise must take responsibility for its own capital like other enterprises, according to the Ministry of Industry and Trade.
In addition, there is currently no mechanism for the State Bank to guarantee the exchange rate for investors. That is, there is currently a lack of legal basis for implementing foreign currency conversion guarantees in power projects, the report sent to the Prime Minister stated.
Regarding the mechanism of transferring gas prices to electricity prices, the Ministry of Industry and Trade said that the Government agrees in principle to transfer gas prices to electricity prices for the Block B, Blue Whale, LNG Nhon Trach 3 and 4 projects. However, the Government noted that the negotiation of electricity and gas output at Nhon Trach 3 and 4 projects is a production and business agreement between enterprises.
Due to many obstacles and lack of legal basis, the energy management agency estimates that only 6 more projects can be put into operation before 2030, with a total capacity of 6,600 MW. This number includes projects in the O Mon Power Center; Nhon Trach 3 and Nhon Trach 4, Hiep Phuoc. The remaining projects will only be put into operation before 2030 if they complete negotiations on power purchase contracts and arrange loans before 2027. The gas-fired power project in the Lot B gas-fired power chain, Blue Whale, depends on the progress of the upstream project, the gas field - Lot B.
As for offshore wind power, the reason no project has been implemented is because it is stuck in a series of regulations in the Law on Marine and Island Resources and Environment, the Investment Law, the Bidding Law, and the National Marine Spatial Planning.
In addition, in order for LNG and offshore wind power projects to operate in accordance with Power Plan VIII, the mechanisms related to laws such as the Land Law, Price Law, Bidding Law, Electricity Law, and guiding documents need to be promptly amended and resolved by competent authorities.
At the end of November, businesses petitioned the Ministry of Industry and Trade and said that there should be a resolution and policy from competent authorities on specific mechanisms for investors when implementing projects of these two types of power sources.
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