Vietnam Guarantee Project

closed

The Phu My 2 Phase 2 Power Project will enable Vietnam meet its increasing power demand in a cost-effective, reliable manner, thus contributing to sustainable economic growth, and poverty alleviation. Private sector financing will be mobilized towards the infrastructure sector, and, government reforms will be promoted, paving the way for further private participation in the sector. The project consists of a 715 MW gas-fired combined-cycle power facility, to be built, owned, and operated on a Build-Operate-Transfer (BOT) basis, by a limited liability company, the Mekong Energy Company Ltd. (MECO), under operation by Electricity of Vietnam(EVN). The key project agreements, with Vietnamese counter-parties are: 1) BOT contract between MECO and the Ministry of Industry (MOI), setting the obligations of both parties, where the government grants MECO exclusive rights to finance, construct, own, and operate the power station; 2) power purchase agreement between MECO and EVN, providing for electricity sale to EVN on the basis of a two-part tariff; 3) agreement for the sale of natural gas between MECO and Petro Vietnam; 4) water supply agreement between MECO and Ba Ria-Vung Tau (BR-VT); 5) land lease agreement between MECO and the Urban Development Construction Company of BR-VT (UDECO) the lessor, setting the land location to be leased; 6)government guarantees between MECO and the Ministry of Planning and Investment (MPI), guaranteeing the due performance of obligations of counter-parties to MECO; and, 7) investment license issued by MPI, setting the terms of license awarded to MECO. Contractual agreements with the private sector cover: engineering, procurement, and construction contracts with international firms; technical services for operation and maintenance; long-term services agreement with General Electric (GE), as equipment supplier; and, insurance contracts, specifying coverage of commercial insurance policies. Financing documents between financiers and MECO, will set the debt financing arrangements, through loan facility agreements, and other arrangements.