A report from the Ministry of Industry and Trade (MoIT) said the country’s list of key power projects includes 18 LNG-fired plants and one coal-fired plant, excluding nuclear power projects. Of the 18 LNG projects, 16 have selected investors, while LNG Nghi Son and LNG Long Son are still selecting investors.

Securing an investor, however, is only the first step. Most LNG projects remain in the pre-investment phase and have yet to begin construction. Developers still need to complete legal procedures, clear land, arrange financing, negotiate PPAs, and develop infrastructure for importing LNG.

Under the revised eighth national power development plan (PDP VIII), Vietnam plans to build and commission 22 LNG-fired power projects between 2025 and 2035. By 2030, 15 projects with a total capacity of 22,524 MW are expected to enter commercial operation, accounting for about 9.5-12.3% of the country's power capacity serving domestic demand.

So far, only Nhon Trach 3 and Nhon Trach 4 in the southern city of Dong Nai have entered commercial operation, highlighting the gap between projects included in PDP VIII and operational plants.

The Ministry of Industry and Trade has warned that without stronger measures, a number of LNG projects could miss the deadlines under the PDP VIII, potentially putting pressure on Vietnam’s energy security during 2028-2030.

PPA terms remain key hurdle for LNG projects

The biggest obstacle is the PPA, the ministry noted.

To secure project financing, developers need greater certainty over power offtake, electricity pricing, and fluctuations in LNG prices and exchange rates.

Under the current mechanism, the minimum long-term contracted electricity output for projects using imported LNG is 65% of their average annual generation, applicable during the debt repayment period but for no more than 10 years.

The MoIT has proposed raising the power offtake rate to 75% and extending the maximum application period to 15 years to provide more predictable cash flows and improve banks’ willingness to finance the projects.

Some investors, however, are seeking even stronger guarantees, proposing contracted output of 85-95% for periods of 20-25 years.

The ministry estimates that setting the offtake rate above 80% could create a mismatch between guaranteed generation and actual system demand. If plants are not dispatched, power buyers could still be required to make payments under the contracts, increasing costs for the electricity system.

Associate Professor Ngo Tri Long, an expert at the Vietnam Association of Financial Consultants, said financing and market demand are the two biggest constraints facing LNG power projects.

LNG plants require large upfront investments and have long payback periods, while imported fuel costs are exposed to global commodity prices, shipping costs, foreign exchange fluctuations, and geopolitical risks.

Without clearer mechanisms governing electricity prices, dispatch volumes and the responsibilities of buyers and sellers when market conditions change, banks may remain reluctant to provide financing and developers may hesitate to commit capital, Long said.

He recommended Vietnam address both sides of the equation simultaneously: projects need predictable cash flows and bankable PPAs, while the electricity market must become more transparent and competitive and provide appropriate price signals.