Guarantees sought to secure developments in LNG power

Vietnam’s liquefied natural gas development is facing financing pressure as investors seek stronger electricity output guarantees to secure long-term funding for key projects.

- By Nha Phuong

Regulators are gradually addressing some of the electricity market's most critical complexities

(Photo: Le Toan)

In a May report compiling stakeholder feedback on proposed amendments to regulations guiding the Electricity Law, released by the Ministry of Industry and Trade (MoIT), liquefied natural gas (LNG) investors collectively proposed a sharp increase in the minimum contracted electricity output (Qc), currently set at 65 per cent.

According to developers, LNG power ventures are characterised by extremely high upfront investment costs, while fuel expenses remain heavily dependent on imported LNG prices that fluctuate in line with global markets. Without a sufficiently strong output guarantee mechanism, lenders are reluctant to provide long-term financing.

Petrovietnam Power Corporation (PV Power), the developer of the Nhon Trach 3/4 LNG-fired power plants, proposed that the minimum committed output should be no lower than 85 per cent of average multi-year electricity generation to ensure debt repayment capability and support future investment plans.