The Japan Bank for International Cooperation (JBIC) has signed a loan agreement on buyer credit, totalling up to ¥7.3bn (around US$59mn) with Vietnam Electricity (EVN). The loan was co-financed with Mizuho Corporate Bank (agent bank) and Societé Générale Tokyo.
This loan aims to finance the construction of a second thermal power project (Hai Phong 2) with a capacity of 600MW by the Hai Phong Thermal Power (Hai Phong TP), one of the EVN group companies.
Hai Phong TP is already constructing a coal-fired thermal power plant (Hai Phong 1). As with the Hai Phong 1 project the power generation facilities will be supplied and installed by a consortium of Marubeni and Dongfang Electric Corporation (China), the loan therefore will help finance this.
Addressing the short power supply is a high priority on Vietnam’s agenda. Since adopting the Doi Moi policy in 1986 Vietnam has experienced a sharp rise in power demand due to fast economic growth. In May 2005 a widespread blackout occurred in the northern region where the power system could not withstand the surging demand.
The construction of both Hai Phong 1 and 2 will help secure a steady supply of power, which in turn will boost Vietnam’s economy and business.
In the meantime, the Export-Import Bank of China is to provide a loan for the export of power generation facilities by Dongfang Electric Corporation. Under this project, the successful collaboration of Japanese and Chinese firms has enabled them to secure an order in the third world, with export credit agencies in Japan and China providing financial support for their business.