Phu My 3 BOT Power Company Ltd
MIGA has issued $43.2 million in guarantees to SembCorp Utilities Pte. Ltd., (SembCorp) of Singapore to cover its $38 million equity investment in the Phu My 3 BOT Power Company Ltd. (PM3) in Vietnam. MIGA has also issued $75 million in coverage to Credit Lyonnais of France to cover a $43 million non-shareholder loan to the project. Credit Lyonnais is the guarantee holder acting as Agent for itself and 4 other commercial banks who are jointly providing a total commercial loan of $170 million. The coverage provided to SembCorp is for up to fifteen years, and is against the risks of transfer restriction, expropriation and breach of contract. The coverage provided to Credit Lyonnais is for up to fifteen years, and is against the risks of transfer restriction, expropriation, breach of contract and war and civil disturbance.
The investment, which is part of an upstream-midstream power initiative in Vietnam, involves the construction, operation and maintenance of a 716.8 megawatt (MW) combined cycle, gas-fired electric generating plant. The project is located in the province of Ba Ria some 70 kilometers south-east of Ho Chi Minh City, and is structured as a build-operate-transfer (BOT) operation. PM3 will consist of one combined cycle power block equipped with two 230 MW combustion turbines, two heat recovery steam generators, and one 260 MW steam turbine. The advanced turbines have been selected due to their high thermal efficiency and low environmental impact. The plant will produce up to 4,700 gigawatt hours of power per year, which will be made available to Electricity of Vietnam (EVN), the public electricity utility, under a 20 year power purchase agreement (PPA). At the conclusion of the 20 year PPA period, the plant will be transferred to the government.
With demand for electricity in Vietnam growing at an annual average of 13-15 percent over the past five years, PM3 will help meet the increased demand in a cost-effective and reliable manner. It will also serve to reduce Vietnam’s dependence on hydroelectric generation. PM3 will also bring many other developmental benefits to the country. The construction phase has provided employment to large numbers of Vietnamese workers with about 2,000 people on site at the peak of construction.For the operations phase, Phu My 3 has recruited and trained about 50 Vietnamese engineers who will be responsible for running the plant. In addition, the project has significant upstream effects as the majority of the materials required for the building of PM3 will be sourced from within Vietnam. Furthermore, there will be multiple downstream effects, as Vietnam’s industries, as well as trade and tourism, will benefit from the enhanced reliability of electricity supply.
The project represents one of the largest foreign direct investments ever into Vietnam and is expected to help attract additional private capital investment flows for further infrastructure development in the country. It also addresses two of MIGA’s priority areas, being a south-south investment into an IDA country.