Prime Minister Phuc of Vietnam agreed to include the Bac Lieu...

Prime Minister Phuc of Vietnam agreed to include the Bac Lieu Power plant in PDP7 (Power Development 7 Plan) within 2019 during his final remarks on Nov 8 at the National Assembly’s Oversight Hearing with the Government Administration. The Prime Minister has delivered!

On December 19th, 2019 the Government Office of Vietnam issued letter No. 1725/TTg-CN on the Prime Minister’s approval of the inclusion of the Bac Lieu LNG-to-Power Project into the National Power Development Plan for 2011 - 2020 period with vision to 2030 revised (“PDP7R”) for the entire 3,200MW capacity of the Project.

The letter was signed by H.E. Trinh Dinh Dung, Deputy Prime Minister of the Government of Vietnam cum Head of the National Steering Committee on Power Development (“Deputy Prime Minister Dung”). The letter addressed both the Ministry of Industry and Trade (“MOIT”) and the Bac Lieu Province People’s Committee (“BL-PC”) to oversee the coordination of various agencies and ensure a competitive, transparent and effective implementation of the Project.

The Project’s inclusion in PDP7R is an important milestone that enables BL-PC to grant the Investment Policy Decision as authorized by Deputy Prime Minister Dung in letter No. 5488/VPCP-CN issued by the Government Office of Vietnam on June 21st, 2019. Five (5) days after the Investment Policy Decision is granted, the Investment Registration Certificate (“IRC”) will be issued to Delta Offshore Energy Pte Ltd (“DOEPL”) in accordance with Vietnam’s Law on Investment.

“The issuance of the IRC to DOEPL will signify a new model for Vietnam to attract much needed private sector capital in energy infrastructure. The Project will be the largest Foreign Direct Investment in the Mekong Delta and underpin the socio-economic development in the breadbasket of Vietnam. Most importantly, the Project will provide clean, affordable and secure power to the South of Vietnam where the nation’s electricity shortages are most acute” according to Ian Nguyen, Managing Director of DOEPL.

DOEPL will coordinate with its Strategic Partners in the Bac Lieu LNG-to-Power Project including US based companies General Electric Company (NYSE:GE), LNG Limited (ASX:LNG), Baker Concrete and others to immediately expedite the development phase starting with the full-fledged Feasibility Study. In parallel with the negotiations of the Power Purchase Agreement with Electricity Vietnam (“EVN”), DOEPL and LNG Limited will also begin finalizing a binding sale and purchase agreement (“SPA”) for delivery of 2 million tonnes per annum (“MTPA”) of LNG from LNG Limited’s Magnolia LNG facility.

The Power Purchase Agreement with EVN will be a foregone conclusion as EVN is a State-owned company that was established by the Government! And the Government approved the Bac Lieu plant for 2 important reasons; to make the switch from coal to the cleanest burning fossil fuel of all in LNG + Southern Vietnam will be hardest hit by power shortages from 2021.

6 Nov... A report recently submitted to the National Assembly by the MOIT (Ministry of Industry and Trade) predicts that due to delayed power projects, Vietnam will face a serious energy shortage from 2021 to 2025. According to the report, the peak of Vietnam’s power shortage will fall between 2021 and 2023. In this period, yearly electricity demand will exceed generated electricity by 1.5 to five billion kilowatt-hours (kWh) on average, while in other years this number will fall between 100 and 500 million kWh.

The power shortage will be most severe in southern Vietnam. The ministry warns that in 2021, electricity demand in this region will exceed supply by 3.7 billion kWh, which will rise to 10 billion kWh in 2022 and 12 billion kWh in 2023 before dropping to seven billion kWh in 2024 and 3.5 billion kWh in 2025 as more power projects go into operation.

Tran Tuan Anh, the MOIT, said that the main culprit for these shortages is the delay in electricity generation plant construction, especially ones that are not overseen by the Vietnam Electricity Group (EVN).

Bac Lieu LNG plant has long been considered a critical build and now it’s a certainty of being brought to life!

One quarter of Magnolia’s capacity is sold!

JK.