Equipment of Nhon Trach 3 gas power plant built in Dong Nai province. (Photo: VNA)

Hanoi - The Ministry of Industry and Trade (MoIT) has approved the base price for liquefied petroleum gas (LNG)-fired power produced by combined cycle gas turbine thermal power plants at 0-2,590.85 VND per kWh for this year.

This price does not include VAT and at 2,590.85 VND, is equivalent to 10.56 US cents as the ceiling price, according to the decision on approving the basic price for LNG-fired power issued by the ministry early this week.

Based on this price, Vietnam Electricity (EVN) and power plants will negotiate power prices at power purchase contracts, the ministry highlighted.

The ministry noted parameters used to calculate this base price applied to gas-fired power plants, including net capacity of 1.58 million kWh, net heat consumption rate of 6,330.2 British thermal units (BTU) per kWh at an 85% load and LNG prices of 12.98 USD per million BTU. The exchange rate is 24,520 VND per US dollar.

The price is higher than the preferential feed-in-tariff (FiT) of 9.35 US cents per kWh for solar power, which was lowered to 7.09 US cents in June 2019. For wind power, the FiT is 8.5 US cents per kWh.

According to Vietnam’s Power Plan VIII, from now until 2030, the country must produce 30,424 MW of gas power, including 7,900MW from 10 approved projects under the plan using domestic natural gas, and 22,524 MW from 13 LNG projects that have to be imported LNG from abroad.

Vietnam now has no operational LNG-to-power projects. Nhon Trach 3 and Nhon Trach 4, the first two projects in Vietnam, are under construction in the southern province of Dong Nai.

Meanwhile, Phu My 3 gas-fired power plant in the southern province of Ba Ria-Vung Tau switched to using LNG for power generation in April.

As of May 22, most gas power projects are in the process of investment preparation. Especially, the three projects of Ca Na, Nghi Son and Quynh Lap with a total capacity of 4,500 MW has not yet had an investor.

Other projects that are in the process of preparing for investment such as the first phase of Hai Lang, Quang Ninh have not yet completed their feasibility study. The first phase of Hiep Phuoc LNG, and O Mon 2 has not completed negotiation of power purchase agreement.

Long An I and II projects have not completed adjustment of the investment policy and not had the approved feasibility study.

Meanwhile, the investors of BOT Son My 1 and BOT Son My 2 projects have not yet completed the feasibility studies to get approval.

The reason for this situation is the absence of the base price for LNG-fired power, leading to investors not being able to calculate the investment efficiency.

In addition, there are also delays in site clearance work in localities.