Who is pumping money into coal-fired thermal power projects?
The development of coal-fired power plants in Vietnam depends largely on foreign financial resources, especially China.
A report on financial sources for coal-fired power in Vietnam released by GreenID found that to obtain 13,000 MW of coal-fired electricity currently, Vietnam had to spend nearly US$40 billion.
Of this, domestic capital accounted for 17% (US$6.6 billion) which includes domestic investors’ capital and the loans from domestic banks.
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Regarding domestic financial sources, US$4.1 billion was from investors’ capital and US$2.5 billion from domestic banks. VDB was the leading lender which provided US$1.075 billion worth of loans, followed by VietinBank with US$705 million, BIDV US$374 million and Vietcombank US$126 million.
As for foreign financial sources, the report said US$4.5 billion were from investors and US$16.5 billion from foreign financial institutions.
There are 23 foreign financial institutions providing loans to fund coal-fired thermopower projects in Vietnam which can be divided into three groups – export credit agencies, commercial banks and development supporting financial institutions.
The first group provided 51% of loans (US$8.3 billion). Of the five institutions in the group, China Eximbank is the biggest loan provider with US$4.048 billion.
The second group, providing 32% of capital (US$5 billion), comprises 16 banks, including five from China, five from Japan and six from other countries. Chinese banks are also the biggest lenders in the group.
The third group includes eight countries and a multilateral development bank. China is the biggest lender, providing 50% of financial sources of the group.
China is the biggest financier for Vietnam’s coal-fired power projects.
Nguyen Thi Hang, a coordinator of GreenID, said there is a close relation between Chinese money poured into Vietnam’s coal-fired power projects and the presence of Chinese enterprises as EPC contractors of the projects.
Of 27 coal-fired power plants, 14 were built by Chinese contractors and received funding from China.
Hang cited ‘Carbon trap: how international coal finance undermines the Paris Agreement’ report as another motive for China to fund coal-fired power plants – boosting Chinese exports of equipment, consultancy, design and construction services in Vietnam.
“China wants to export power equipment to other countries because of the oversupply of coal-fired power capacity in the country and the decreased demand for coal-fired power due to the political and economic changes and concern about pollution,” Hang explained.
“Besides, the funding also paves the way for China to invest in infrastructure projects and import natural resources,” she said.
