Germany, Japan finance power deal

News - A US$470 million financing facility backed by Germany's Export Credit Agency and Japan's Nippon Export and Investment Insurance has been arranged for the 750MW PetroVietnam Nhon Trach 2 Combined Cycle Power Plant project in Dong Nai Province, Citi Viet Nam announced yesterday.

The package represents the largest deal in Viet Nam yet backed by the Export Credit Agency and will finance delivery and construction of a state-of-the-art gas-fired combined-cycle power plant.

The German agency will support $295 million of the 12-year financing facility while the Japanese agency will back the remaining $175 million. The entire facility will be guaranteed by Viet Nam's Ministry of Finance, with international banks Citi, HSBC and Credit Agricole as arrangers of the German-backed loans and Citi, the Development Bank of Japan and the Sumitomo Trust & Banking Co Ltd arranging the Japanese-backed portion, according to details of the deal released by Citigroup.

"The Nhon Trach 2 Power Plant is a pivotal infrastructure project helping to meet Viet Nam's electricity needs as the country continues its fast-paced growth," said Citi country officer for Viet Nam Brett Krause.

PetroVietnam Nhon Trach 2 Power Joint Stock Co is a 62.8 per cent-owned subsidiary of the State-owned oil and gas giant, the PetroVietnam Group. The remaining shareholders include Electricity of Viet Nam (EVN), Viet Nam Post and Telecommunication (VNPT), Vinacomin, Company for Technology Development (CFTD) and the Bank for Investment and Development of Viet Nam (BIDV), as well as Japan's J-Power.

PetroVietnam Nhon Trach 2 Power Joint Stock Co CEO Hoang Xuan Quoc called the plant a project of national importance and said it was part of Viet Nam's current National Electricity Master Plan.

"By March 2011, electricity generated from this plant will contribute towards the meeting the increasing power demands throughout the country and consolidating the position of PetroVietnam as the second leading power generation entity in Viet Nam," Quoc said.

Natural gas for the plant will be supplied by PetroVietnam Gas Corp (PV Gas) via pipeline, and the EVN will buy the output of the plant through the national grid.