Vietnam Infrastructure Spotlight - May 2020
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National Energy Development Strategy
The Politburo (the top body of the Party) issued Resolution 55-NQ/TW on 11 February 2020 on the National Energy Development Strategy to 2030.
Top-level energy policy highlights:
- Prioritise sustainable energy infrastructure development;
- Encourage the development of renewable energy, which needs to reach 15–20% of the total primary energy supply mix in 2030 and 25–30% in 2045;
- Rationally exploit domestic fossil energy resources;
- Prioritise gas/LNG-to-power development;
- Build a roadmap for the reasonable reduction of the power share of coal-fired power projects;
- Reduce greenhouse gas emissions from energy activities compared to the business-as-usual scenario by 15% by 2030 and 20% by 2045.
Oil and gas policy highlights:
- Speed up domestic oil exploration activities in offshore areas;
- Prioritise the development of the gas industry;
- Encourage the development of infrastructure for the import of LNG;
- The country’s oil refineries are targeted to meet at least 70% of domestic demand and ensure a strategic petroleum reserve that is equivalent to at least 90 days of net imports.
Coal-plant policy highlights:
- Develop capacity at a reasonable pace, with priority given to large-capacity and high-efficiency units; use advanced and modern technologies, such as ultra-supercritical technology;
- Ensure full compliance with laws on environmental safety in accordance with international standards; and
- Develop a plan for implementing technological upgrades to existing coal power plants in order to meet environmental protection requirements; and close power plants that do not upgrade their technologies in accordance with regulations.
Gas-to-power policy highlights:
- Prioritise the development of thermal power plants using domestic gas sources;
- Encourage the quick development of LNG-to-power projects, and target them to be a critical power supply source, to support the national power system;
- Build adequate capacity to import approximately 8 billion of LNG m3 by 2030 and 15 billion m3 by 2045.
Wind and solar policy highlights:
- Encourage the development of wind and solar power projects, ensuring the safety of the system and a reasonable price;
- Encourage the development of rooftop solar and floating solar projects;
- Prepare breakthrough mechanisms for development of offshore wind power projects, commensurate with Vietnam’s Strategy for Maritime Development;
- Formulate breakthrough mechanisms and policies for the development of renewable energy sources in order to replace fossil energy sources.
Draft Law on Environment Protection
The Ministry of Natural Resources and Environment of Vietnam (MONRE) has released a new Draft Law on Environmental Protection to replace the current 2014 Law on Environmental Protection.
Under the draft law, provisions concerning environmental impact assessments (EIA) have been revised. Projects applying the best available techniques (BAT) and the best environmental practices (BEP) would receive preferential treatment. BAT projects would not be subject to EIA reports and BEP projects would have their EIA reports appraised in a simplified manner.
In order to promote the recycling and reuse of waste, the draft law adds some new provisions relating to waste that can be classified for use in other production processes and as such become raw materials, fuels and material for other manufacturing sectors. Ordinary solid wastes and household solid wastes would be treated on a “polluters pay” principle.
The draft also addresses new areas such as environmental protection tax, green procurement and preferential policies to support the production, distribution and use of environment-friendly products and services, response to climate change, and government expenditures for environmental protection. Source: Vietnam Law Magazine
- Public investment. Vietnam aims to disburse US$30 billion in public investment funds this year, up 67% year-on-year, as it seeks to limit the economic impact of the coronavirus outbreak.Source: Tuoi Tre News
- BT format may be abolished. A representative ofthe Vietnam International Arbitration Centre has proposed eliminating the build-transfer (BT) format as it is fertile ground for corruption and is not suitable for PPP policies. Source: The Saigon Times
- Power transmission. The Ministry of Industry and Trade (MoIT) has proposed that the new PPP Bill should have provisions allowing private companies in power transmission, now a state monopoly. Source: Vn Express
- Coal phase out. Japanese financial giant Mizuho Financial Group will stop investing and offering loans to new coal power projects as well as end all loans for coal by 2050 amid pressure from environmental groups and investors. Source: Vietnam Investment Review
- Lender attitudes shift on coal-fired ventures. A handful of international financial groups have cut their ties with coal-fired power plants – a sustainability move as investors and the public demand strong action on climate change. Vietnam now has 14 new coal power projects which are located in eight provinces with a total capacity of 17,390MW. Seven have already faced public backlash. Source: Vietnam Investment Review
- Wind extension. The MoIT has written to the Government proposing extending feed-in-tariff (FIT) for wind power projects until the end of 2023. According to Decision 39, wind power projects enjoy FITs until the end of 2021. However, due to the negative impact of COVID-19, many wind projects have been postponed and will not be completed on time. Source: The Saigon Times
- Solar wind power farm complex. Ninh Thuan has approved 13 wind power projects with a designed capacity of 680MW and has already put three into operation. One of these projects is a solar-wind farm complex invested by Trung Nam Group. The wind farm components of the project will be rolled out in three phases, using a total investment capital of US$600 million. Source: Vietnam Investment Review
- HCM City rooftop solar. More than 1,000 businesses located at processing, industrial and hi-tech parks in Ho Chi Minh City are set to have solar panels installed on their rooftops in the next few years. Source: Vietnam Investment Review
- Bioenergy. Vietnam needs to develop policies to encourage investments in waste-to-energy, while many investors are showing a growing interest in developing bioenergy in Vietnam. Source:Vietnam News
Oil & Gas
- Pump in. Thai conglomerate SCG Group has approved a plan to inject an additional US$1,386 million into its Long Son Petrochemical Complex project which has changed investors numerous times and fallen behind schedule. Source: Hanoi Times
- Defunct ethanol plant. The Binh Phuoc Ethanol Plant has been losing VND262 billion (US$11.25 million) each year, even though it ceased operations seven years ago. The Binh Phuoc plant was originally established a joint venture formed by PetroVietnam, Licogi 16 JSC and Itochu. Source: Vn Express
- Recovery. It's likely that only in mid-2021 will the domestic market recover to the same as 2019. The international market will not recover until the end of 2021. Source: Vietnam Net
- Take-off. Vietravel Airlines, the country’s newest carrier, plans to launch its first flight early next year. The airline was given in-principle approval from the Prime Minister to start operations in October, but the plans have been put on hold due to the COVID-19 pandemic. Source: Vietnam Plus
- Sale off. Qantas' budget arm Jetstar says it is in discussions with its joint-venture partner Vietnam Airlines about the future of local offshoot Jetstar Pacific, following reports it was moving to exit its minority stake. Qantas owns 30 per cent of Jetstar Pacific. Source: The Sydney Morning Herald
- New airport. People’s Committee in the northern province of Lao Cai has asked the Prime Minister for approval on the investment policy for Sapa Airport. The airport is a public-private partnership (PPP) project with a total investment of about VNĐ4.2 trillion (US$180 million). It has a total designed capacity of 1.5 million passengers per year. Source: Vietnam News
- HCMC – Can Tho Expressway. The Prime Minister has approved state funding for an expressway section that will connect HCMC with Can Tho by 2022. The 23-kilometer expressway will run from the My Thuan Bridge 2 in Tien Giang Province to Can Tho. Source: VN Express
- Metro project. HCM City is seeking the Prime Minister’s approval to build Metro Line 3A connecting Ben Thanh and Tan Kien with total investment capital of VND68 trillion (US$2.96 billion). Source: Intellasia
- Freight trains. Russian Railways to organize freight trains to Vietnam. Exports will be transported by train from Vorsino in Russia’s Kaluga Province through Siberia and China to Yen Vien Station in Hanoi, from where they would be transported by road to shops around the country. The average transportation time from Vorsino to Hanoi, would be 24 days. Source: Tuoi Tre News
- Opportunity. Danang is looking for investors to join in the development of shared infrastructure at Lien Chieu port.Lieu Chieu port will become a major wharf area of an international gateway port in the central area and will ease the pressure on Tien Sa and Son Tra ports as well as urban traffic. Source: Vietnam Investment Review