The international banking community is about to take a giant leap into the unknown with the first ever project financing of a BOT power plant in Vietnam.
Proposals for the financing of Phu My 2.2, a 715MW gas fired power station sponsored by Electricite de France (EDF), Tokyo Electric Power Company (Tepco) and Sumitomo Corp, estimated to cost between $400 and $450 million, were due to be submitted on 23 October. Close on Phu My 2.2's heels, banker's expect another power project deal for Phu My 3, a 720MW facility sponsored by BP Amoco, SembCorp and Kyushu Electric. The two ventures are part of the overall 3,600MW Phu My power and Nitrogen complex, one of the key infrastructure schemes in Vietnam's national power development master plan.
The two projects are being planned around what bankers describe as fairly standard IPP formats. But given the nature of the government in Vietnam and the fact that there is no track record of project finance in the country, the financings will be about as speculative as any in the project finance universe. As one banker in Hong Kong puts it: ?Vietnam's right out there at the end of the spectrum in terms of project finance risk.?
One aspect of the Vietnamese power industry that hasn't worried the banking industry so far is deregulation. In broad terms EVN aims to develop a national electricity grid by 2020 that will include power stations driven by a range of energy sources. By 2005, EVN plans to build a...
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