06:25 | 07/08/2020 Industry
(VEN) - Prime Minister Nguyen Xuan Phuc recently in-principle approved to add the LNG gas-fired power project near Ke Ga Cape in the southern province of Binh Thuan to the National Power Development Master Plan for the 2021-2030 period, with a vision towards 2045 (Power Development Master Plan 8). This project, together with the Thang Long Offshore Wind Power Project, will contribute to turning Binh Thuan into a national energy hub.
Perspective of LNG gas-fired power project near Ke Ga Cape with FSRU model
At a July 23 online meeting with Binh Thuan Province’s authorities, PM Phuc assigned the Ministry of Industry and Trade to add the LNG gas-fired power project to Power Development Master Plan 8 and submit it to the Prime Minister in August 2020. The PM believes that together with the Vinh Tan Power Center, the development of gas-fired power and renewable energy resources will help turn Binh Thuan into an energy hub of the whole country.
A memorandum of understanding (MoU) on investment in the LNG gas-fired power project was signed in 2019 between Energy Capital Vietnam (ECV) and the People’s Committee of Binh Thuan Province. Under the MoU, ECV (USA), KOGAS (the Republic of Korea) and Excelerate (USA) will invest in the project. ECV is working with Exelon (NASDAQ: EXC), which is America’s largest clean energy company, for development and operations expertise at Ke Ga Cape. The project, with design capacity of 3,600 MW and total investment of US$4.2 billion, will be based in Tan Thanh and Tan Thuan communes, Ham Thuan Nam District, and is expected to be completed in 2028.
US government support
According to the investors, the project is supported by the US government. In 2019, the US Embassy in Vietnam sent two diplomatic notes to the Vietnamese Ministry of Industry and Trade regarding the project. In March 2020, the US Assistant Secretary of Commerce sent a note to the leadership of the Ministry of Industry and Trade. In July 2020, the US Secretary of Department of Energy requested Vietnamese Deputy Prime Minister Pham Binh Minh to support the project and add it to current Vietnam’s national power development master plan.
The LNG project consists of three stages. The first stage with capacity of 1,200 MW is expected to end in 2024 with total expenditure of about US$1.8 billion. LNG resources required to operate the project will be imported directly from the US. The project financing expertise is ready, ECV has signed a mandate with Deutsche Bank to serve as its debt structuring advisor and to become global lead arranger for a loan of up to US$1.5 billion for phase 1.
“Given the sustainable development of the Vietnamese power sector over the past more than six decades, and based on the risk management experience of the investor group, we are committed to implementing the project in accordance with the Vietnamese government’s guidelines,” an ECV representative said. “We are willing to share the project’s risks in Vietnam as those in world-leading countries through insurance policies”.
The investors proposed that the project be implemented according to a BOO (Build-Own-Operate) model through an Independent Power Producer (IPP) mechanism in order to minimize the demand for government guarantees and accelerate implementation.
The investors have negotiated with Binh Thuan Province’s authorities to enable the project’s location in the same coastal area as the Thang Long Offshore Wind Power Project. The consulting unit proposed that both projects use the same connection to the 500kV power grid.
Nguyen Ngoc Hai, Chair of the Binh Thuan Province People’s Committee, affirmed that the LNG project plays an important role in the province’s socioeconomic development. “The project will comprise a gas-fired power plant and a warehouse about 5km from the coast, covering about 2sq.km of the sea surface. We have checked carefully all conditions in terms of soil as well as shipping and welfare of coastal residents, and believe the project will help Binh Thuan bring into play its advantages to promote socioeconomic development and gradually become a national energy center,” Hai said.
“Binh Thuan Province will coordinate with ministries and sectors to adjust its existing plans and economic development strategy in order to bring into play its advantages, looking to become a national energy hub to create new impetus for long-term and sustainable economic development,” Hai emphasized.
According to experts, using LNG to generate thermal power is clean, highly efficient and requires lower operation and maintenance costs compared with coal-fired power plants. Moreover, LNG power plants can be operated flexibly and enable frequency modulation, minimizing and effectively controlling the impact on the environment, landscape and safety.
|Currently, power plants in Binh Thuan have a capacity of more than 6,077 MW. The province contributed 26 billion kWh of electricity to the national power grid in 2019 and expects the amount to increase to 32,000 kWh this year.|