MoIT to resolve obstacles for Long An I and II LNG power plants

On July 27, a Ministry of Industry and Trade delegation met Tay Ninh People’s Committee to review power generation and transmission projects under the revised Power Development Plan VIII. Discussions focused on removing obstacles delaying the Long An I and II LNG power plants, developed by Long An Energy Group Co., Ltd.

According to Long An Department of Industry and Trade, the investor has received investment approval, fulfilled its deposit obligations, and completed numerous procedures concerning land, construction, environmental protection, and fire safety.

The feasibility studies, basic designs, and environmental impact assessments have been approved, while plans to connect the plants to the national grid via 220kV and 500kV transmission lines have been incorporated into the revised plan.

However, construction has yet to begin. The main obstacle is a failure to agree land lease terms with the developer of Southeast Asia Industrial Park Phase 2, including unit prices, payment methods, and other commercial conditions.

The projects also face challenges involving LNG imports, gas infrastructure leases, and financing. Certain provisions in the current legal framework and power purchase agreement do not meet the requirements of domestic and international lenders.

“Due to pending obstacles, the projects can’t fully meet the conditions for commencement as stipulated in the Law on Construction 2025. Tay Ninh People's Committee requested the investor to focus on completing the legal and technical conditions to strive for commencement before August 30. In case of further delays, a review will be conducted and recommendations will be made to the authorities for consideration and action,” said Tran Thanh Toan, deputy director of Long An Department of Industry and Trade.

The Long An I and II LNG power plant project has a total capacity of 3,000MW and a total investment of approximately $3.13 billion. The project received investment approval in March 2021 and an adjustment to the investment policy in June 2024.

Long An LNG Plant I is expected to begin commercial operation in June 2028 and Long An LNG Plant II in June 2031.

Tran Thanh Hai, general director of Long An Energy Group Co., Ltd, said, “The company has implemented many substantive tasks, including depositing VND525 billion ($19.9 million) for land lease since 2020 and continuing negotiations to finalise the land lease contract. The company proposes that the province continue supporting the resolution of remaining disagreements during negotiations and to consider appropriate mechanisms to expedite land procedures.”

“The major difficulty currently is the ability to secure funding. Some regulations in the current legal framework and the terms of the PPA do not meet the requirements of international credit institutions and financial institutions,” Hai said.

According to the investor, in case electricity production is lower than expected, the company will still have to fulfil its financial obligations and long-term LNG purchase contracts, reducing the project's financial feasibility. The enterprise proposed studying the addition of a Standby Payment mechanism and a Fuel Take-or-Pay recovery mechanism to enhance the project's capital mobilisation and financial feasibility.

“If the obstacles related to land, financial mechanisms, and power purchase agreements are resolved, the enterprise commits to commencing the project within 3-6 months of signing the power purchase agreement,” Hai said.

Vice Chairman of Tay Ninh People's Committee Nguyen Hong Thanh said that the province focused on directing departments, agencies, and localities to coordinate with the investor to resolve problems related to investment procedures, land, planning, land clearance, and administrative procedures to accelerate the progress of power generation and transmission projects according to the revised Power Development Plan VIII.

Deputy Minister of Industry and Trade Nguyen Hoang Long said, “It is a large-scale project using foreign investment capital and playing a crucial role in supplementing the power supply for the region as well as the national power grid. Therefore, the investor and partners need to continue accelerating the negotiation, actively resolving obstacles, harmonising interests and sharing risks so that the project can soon meet the conditions for commencement.”