Bac Lieu’s LNG power project’s issues

The provincial People’s Committee of Bac Lieu has been assigned to coordinate with relevant ministries and agencies to work with the investor of the Bac Lieu LNG power project and report to the Prime Minister in the first quarter of 2023.

After 3 years, the project’s initial investment preparation phase has not yet been completed.

The provincial People’s Committee of Bac Lieu is tasked with coordinating with relevant ministries to work with the investor of the Bac Lieu LNG Power Project and report to the Prime Minister in Q1/2023.

As of now, after 3 years, the preparation phase for investment has not been completed.

In December 2022, during a meeting between the Prime Minister and the leadership of Bac Lieu province, the provincial People’s Committee was assigned the task of working specifically with the Ministry of Planning and Investment and the Ministry of Industry and Trade to reach a consensus with the investor on the optimal solution to ensure project progress and efficiency, and to report to the Prime Minister in Q1/2023.

After that, the Bac Lieu Provincial People’s Committee had meetings with relevant authorities to find ways to resolve the difficulties of the project, but as of now, there is no further information from the local authorities sent to the relevant ministries/sectors regarding this project. Therefore, more than 3 years have passed since the LNG Bac Lieu Power Project was granted an investment registration certificate on January 16, 2020, and the tasks related to preparing for the project implementation have not been completed, so it is not possible to proceed to the construction phase of the power plant.

According to the schedule stipulated in the investment decision and investment registration certificate, unit 1 (800 MW) must operate and supply electricity to the national grid in 2024; by 2027, the entire designed capacity of 3,200 MW of the project must be put into operation.

Regarding the project, the Investment Newspaper reported in January 2023 that Delta Offshore Enegry (DOE) – the investor and Bac Lieu LNG Power Company Limited (BLLP) had sent letters to many places to report on the project’s progress. DOE and BLLP stated that they had made every effort to complete the necessary procedures for the investment preparation phase of the project.

At present, there are only a few remaining issues related to the approval procedures for certain “State guarantees for investment projects” mechanisms within the jurisdiction of the Prime Minister under the provisions of the Investment Law, as a basis for Vietnam Electricity (EVN) and DOE to complete negotiations, sign the Power Purchase Agreement (PPA) and implement the Project in accordance with the schedule.

Therefore, the investor has requested that the People’s Committee of Bac Lieu province continue to cooperate with the Special Task Force of the Prime Minister and relevant ministries and agencies to propose appropriate policy solutions to the Prime Minister for approval in accordance with the authority, in order to ensure the fulfillment of the loan conditions from international lenders in the PPA, based on compliance with the regulations and guidelines of the Ministry of Industry and Trade on PPA negotiations, and promptly report to the Prime Minister on any issues that exceed the authority.

Regulations with no precedent

The Bac Lieu LNG Power Project, with an investment scale of approximately 4 billion USD, the largest in the Mekong Delta region, has received attention from the government leaders. In Document No. 91/TB-VPCP announcing the Prime Minister’s conclusion at a working session with Bac Lieu province on February 26, 2020, the Prime Minister assigned the Ministry of Industry and Trade to lead and coordinate with the Ministry of Planning and Investment and relevant agencies to consider the province’s proposals, handle them according to the law, and prevent delays in handling localities’ and investors’ proposals.

According to the Prime Minister’s conclusion, Bac Lieu province will be fully responsible for selecting the investor to implement the LNG power plant project. After receiving the Report of the Special Task Force of the Prime Minister on specific issues to remove obstacles for the Bac Lieu LNG Power Project in February 2022, by March 17, 2022, the government leaders directed the ministries of Industry and Trade, Finance, Justice, State Bank, State Capital Management Committee in Enterprises, and EVN, according to their assigned functions and tasks, to thoroughly review the contents of the proposals of the Ministry of Planning and Investment for processing, guiding the Bac Lieu Provincial People’s Committee and the investor to implement in accordance with the provisions of the law and relevant directives of the government leaders.

According to the report, the Special Task Force presented 5 specific issues and suggested that the relevant parties handle them. Regarding commitments on the application of laws, dispute resolution agencies, and language in the PPA, ensuring investment in the event of legal changes, these are issues within the jurisdiction of EVN and the investor, and EVN is recommended to study and negotiate in accordance with the law. Regarding the commitment to currency conversion, the State Bank of Vietnam is requested to study and propose a mechanism to support the conversion of a portion of the project’s foreign currency based on Vietnam’s foreign exchange balance, which will be reviewed and decided upon by the Prime Minister. As for the commitment to ensure payment obligations for EVN and compensation for damages upon termination of the PPA, the Ministry of Finance, the State Capital Management Committee at Enterprises, EVN, and relevant agencies are requested to report to the Prime Minister on this matter, in accordance with the regulations on management and use of state capital invested in production and business at enterprises.

The report suggests that for the conversion of LNG gas price to electricity selling price, ensuring the consumption of electricity, guaranteeing transmission lines and connection, EVN should negotiate with the investor according to current regulations, in line with the actual conditions of the Project, and report to the Ministry of Industry and Trade in case it exceeds its jurisdiction, to ensure that the Project is implemented on schedule, in accordance with the power plan. Regarding the commitment to mortgage land use rights and the content of the land lease contract, the investor is requested to study and implement in accordance with the land law regulations.