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Financing has closed for the Phu My 2.2 power project in Vietnam after several years of negotiations.

It will be Vietnam’s biggest power project.

The US$480mn project finance facility (D7.2tn) is for the construction of a 715MW gas-fired power station at the Phu My power complex, 85km south of Ho Chi Minh City.

A consortium of French and Japanese power companies Mekong Energy Company (Meco) is sponsor of the project. Meco comprises EDF International (56.25%), Sumitomo Corporation (28.125%) and Tokyo Electric Power Company International (15.625%).

The project has a debt:equity ratio of 75%:25%. The World Bank is giving a US$75m IDA political risk-guaranteed facility. There is a US$25mn ADB political risk guaranteed facility and a US$50mn direct loan. Japan’s JBIC is providing a US$150mn direct loan, while US$40mn is coming as a direct loan from Proparco, the French government financing agency. The political risk guarantee (PRG) comes from Sovereign of Bermuda.

ANZ, SG and Sumitomo Mitsui are the three co-ordinating lead arrangers. The commercial bank portions of the debt have a 100% political risk guarantee and come to around US$100mn.

All debt is lent offshore under a common terms agreement before being on-lent to the project company in Vietnam. The various tranches of the debt have tenors ranging between 11and 16 years.

The project is now under construction and commercial operations are due to start in September 2004. It will be powered by advanced 9FA+ turbine technology, produced by GE.

The power station will be supplied with gas from the Nam Con Son offshore gas project, which is led by BP. BP, has its own downstream power interests in the Phu My 3 power project, which it jointly owns with Sembcorp of Singapore and a host of Japanese developers.