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Korea Electric Power and Marubeni Corporation have secured approximately US$1.87 billion from a consortium of lenders to finance the Nghi Son 2 coal-fired power generation project in Vietnam. This follows the commercial close of the project, which was achieved in December.
The project involves the construction, ownership and operation of a coal-fired power plant with an installed capacity of 1,200 MW (two units of 600 MW each) in Nghi Son district, Thanh Hóa Province. The electricity generated from the plant will be sold to Vietnam Electricity (EVN), a state-owned power utility in Vietnam, for 25 years.
The consortium of lenders is comprised of the Export-Import Bank of Korea (KEXIM), Sumitomo Mitsui Banking Corporation, MUFG Bank, Mizuho Bank, Shinsei Bank, Oversea-Chinese Banking Corporation, DBS Bank, Malayan Banking Berhad and the Japan Bank for International Cooperation (JBIC). JBIC's portion of the package amounts to US$560 million. JBIC and KEXIM are providing political risk guarantee for the finance provided by private institutions.
In October 2017, the Japanese government made overseas power generation business implemented by Japanese companies a priority policy area. As Japan's policy-based financial institution, this explains JBIC's sustantial involvement in the project.
This is the first IPP project to be developed in Vietnam with investment from a Japanese company in approximately 15 years. The project was mentioned in a joint statement by the two countries issued in June 2017 as a part of efforts to strengthen cooperation in the energy sector.
The growth in demand for electricity in Vietnam over recent years has not been matched by an increase in power generation. Thus, this project will combat growing power supply shortages. Through delivering a stable, base-load power source, it will also contribute to economic development in Vietnam.
Efforts to expand the country's generation capacity are evident - the Vietnamese government recently appointed the EDF Group to lead the development of a 2000 MW gas-fired power project in Quang Ngai province.