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Long Phu I coal power plant Vietnam
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Created on: 2017-07-10 16:36:51
Last update: 2019-08-15 11:12:13

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Aerial view of construction site of Long Phu 1 power project. Photo: Courtesy of Google Maps/Google Earth
Sector Coal Electric Power Generation
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
Website https://www.ptsc.com.vn/en/projects/onshore-projects/long-phu-thermal-power-plant-project-2.html
This project has been identified as an Equator Project

About Long Phu I coal power plant

The first of the three proposed power stations at the Long Phu Power Centre is Long Phu I, a 1200MW coal-fired power station developed by Hanoi-based PetroVietnam Technical Services Corporation (PTSC), a subsidiary of energy provider PetroVietnam Group. Global engineering firm Black & Veatch won a contract to design and manage construction of the facility. It will import about 2.6-2.8 million tons coal a year from Indonesia or Australia. Another power plant, Long Phu II, 1320MW, is planned for the same site.

Long Phu I will be responsible for emitting over 7 million tonnes of CO2 each year, and there is evidence that it will be more polluting than suggested by the project's feasibility and due diligence studies required to secure funding. The plant is also expected to exacerbate local river and air pollution problems. Construction on the plant has started and is expected to be completed in 2018. The plant requires an investment of USD 1.59 billion. HSBC, Cathay United Bank, JP MorganChase and Mitsubishi UFJ are the lead arrangers behind a planned USD 650 million loan for the plant.

Latest developments

Construction Long Phu I delayed to 2023

2019-08-02 00:00:00

Long Phu I faces three years delay

2018-06-11 00:00:00

Why this profile?

The construction of Long Phu I will negatively impact local livelihoods as well as the environment. The power plant causes the conversion of agricultural land to industrial use, thereby impacting local farmers and causing the relocation of local people. The new coal power plant will also exacerbate pollution in the area leading to serious health risks. The plant will emit 6 million tonnes CO2 every year and will thus also worsen climate change. Enormous amounts of water are also needed for the operation of the power plant. This water will be used from the local Hau river, after it will be discharged in that same river again. Due to temperature differences, this will be fatal for many aquatic species.

What must happen

The Paris Climate Agreement goals require a managed decline of fossil fuel production, and the construction of new coal fired power plants is not compatible with this. Banks must therefore immediately stop financing new coal-fired power plant developments anywhere in the world.

Furthermore, due to all the expected impacts of Long Phu I on the environment and local populations, the lead arrangers for financing this project, HSBC, Cathay United Bank, JP Morgan Chase, Mitsubishi UFJ Financial Group and the involved export credit agencies should not finance this project and withdraw from it alltogether. 

Impacts

Social and human rights impacts

The project area is mostly made up of rice fields, but also includes orchards and vegetable gardens. The conversion of this land from agricultural to industrial use will impact the livelihoods of local farmers and likely displace many people, as the local community includes more than 10,000 people.

Aquaculture is also important in the area and will be impacted by the increased pollution of river water and the discharging of the plant’s cooling water into the river.

The construction of the Long Phu complex poses serious risks for health and life of local peoples. According to a recent study by Harvard University, emissions from Vietnamese coal power plants were responsible for 4,300 premature deaths in 2011. This number is predicted to rise to 21,100 by 2030 if new coal power plants are built in Vietnam. For children especially, the risks that stem from the pollution of carbon dioxide, mercury and arsenic are high and can cause lung injuries, lead to nerve diseases and cardiovascular infections.

Environmental and climate impacts

The Long Phu I project will be responsible for emitting over 7 million tonnes of CO2 each year.

There is evidence that Long Phu I will be more polluting than suggested by the project's feasibility and due diligence studies required to secure funding. A recent report by Friends of the Earth revealed that ERM Vietnam, retained by PetroVietnam and HSBC to conduct a due diligence review, has overestimated the efficiency of Long Phu I and underestimated its CO2 emissions, estimates 'unexplained and unsupported by any engineering analysis', and inconsistent with the estimated emissions of 800g CO2/kWh found by engineering firm Fichtner Viet Namthe (the project manager consulting firm for the project), General Electric (the turbine supplier), and the United States Export-Import Bank.

The Vietnamese government has demanded serious efforts to reduce global warming. In 2016 it announced that it would drop plans for further coal-fired power plants. The Vietnam Sustainable Energy Alliance (VSEA) has, in cooperation with the WWF, published a study according to which Vietnam can supply 100% of its electricity demand from renewable energy, proving that there is no need for the plant in the first instance.

The Long Phu complex is located on the shore of the Hau River. Tuoi Tre News reports that several factories, processing plants and industrial parks on the banks of the river have in places rendered the air ‘too polluted to breathe’, while the water is ‘blackened and full of trash’. The addition of the Long Phu I plant will further contribute to the pollution blighting the Hau river.

The site of Long Phu I is mostly rice field and gardens, with ‘patches of natural brushes, orchards, vegetable gardens, grass lands, ponds, and patches of habitats’ linked by corridors of natural vegetation. These corridors along canals and the river bank offer protection from erosion and provide habitat for wildlife.

Air pollution is a concern during both the construction and operation phases. Pollutants are mainly dust, exhaust fume with CO, SO2, and NOx. In addition, the use of material transport vehicles by the plant will create further air pollution, noise, and will worsen traffic.

Water issues are another environmental concern. It will take an enormous amount of water to construct and run the plant. During the construction phase of the plant, 720.5m3 (more than 700,000 litres) of water will be used per day while during the plant’s operation 4,000 m3 (4 million litres) of fresh water will be required daily.

The plant will use water from the Hau river for cooling and the heated water will be discharged back into the river. This discharged water will be around 10°C hotter than the optimal temperature for various aquatic species, and thus fatal for many of them. Furthermore, river dredging for the construction of a port route for Long Phu I will negatively impact aquatic life by increasing turbidity and destroying habitats.

Other impacts

Officials from PetroVietnam (PVN) face charges for violation of an anti-corruption law related to many projects and activities including the awarding of the Long Phu I EPC contract. Vietnamese state news site Nhan Dan reported investigations and dismissals of Phung Dinh Thuc, Nguyen Xuan Son, and Do Van Hau, who all had senior roles in PVN. Phung Dinh Thuc and Do Van Hau both participated in the signing of Long Phu I.  Financial support for Long Phu I triggers the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions and the OECD Council Recommendation on Bribery and Officially Supported Export Credits.

The two Russian banks involved in financing Long Phu I - Gazprombank and Vnesheconombank - are on the US and EU sanctions list relating to Russia's violent annexation of Crimea.

Governance

Bank policies

The following bank investment policies apply to this project:
Export-Import Bank of the United States (EXIM)
csr policies
2019-11-04 00:00:00

Carbon policy

date listed represents date as accessed on website
2019-11-04 00:00:00 | EXIM Bank US

Applicable norms and standards

Equator Principles
OECD Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (OECD Common Approaches)
OECD Sector Understanding on Export Credits for Coal-Fired Electricity Generation Projects (OECD Coal Sector Understanding)

Timeline

Construction Long Phu I delayed to 2023

2019-08-02 00:00:00

Power Machines, the major contractor of Long Phu I, suspended its construction work since March 15, 2019 due to a US sanction on the Russian company. This sanction, preventing Power Machines from doing business with local and international banks, has seriously delayed the construction process. In June 2019, a report was published by the Ministry of Industry and Trade which stated that the completion date of Long Phu I is delayed to 2023.

Long Phu I faces three years delay

2018-06-11 00:00:00

The Long Phu I coal power plant has faced much delay because of a US sanction on Russian major contractor Power Machines, Vietnamnet reported on June 11, quoting a Vietnamese government report. The project is expected to face a delay of 36 months compared with original plans after the US Treasury put Power Machines in an embargo list on January 26 this year. General Electric unilaterally suspended a contract to supply turbines and generators while other sub-contractors were unable to transact in USD. Many international banks also said they have frozen the pledged USD 780 million loans for Long Phu I.

PetroVietnam has withdrawn request for Ex-Im Bank US funding

2018-02-11 00:00:00

The Export-Import Bank of the United States, a lender run by the American government, has said that the Vietnamese state-controlled company, PetroVietnam, has withdrawn its application for financial support for the Long Phu I coal power plant (NY Times).

Financiers

The total project costs amount to USD 1.9 billion. The sponsors will finance the project on a 70:30 debt to equity ratio, seeking USD 1.4 billion in debt. HSBC, Cathay United Bank, JP MorganChase and Mitsubishi UFJ plan to lend USD 650 million for the project.

In February 2018, it was reported that Petrovietnam withdrew its application for funding from the US Ex-Im Bank.

Related companies

Project sponsor

PetroVietnam Technical Services Corporation (PTSC) Vietnam

General Contractor for Engineering, Equipment Procurement, Construction, Installation and Commissioning as part of the consortium with Power Machines and BTG.

Other companies

BTG Energy Slovakia

General Contractor for Engineering, Equipment Procurement, Construction, Installation and Commissioning as part of the consortium with PTSC and Power Machines.

OJSC Power Machines Russian Federation

General Contractor for Engineering, Equipment Procurement, Construction, Installation and Commissioning as part of the consortium with PTSC and BTG.

News

| |
Type:
Year:
blog
external news
our news

Will Vietnam’s new energy policy mark a turning point for coal?

2020-07-22 | Eco-Business
blog
external news
our news

Leading NGOs urge Vietnam to scrap new coal-fired power projects

2020-01-02 | VN Express
blog
external news
our news

HSBC and Standard Chartered accused of “rank hypocrisy” for financing of highly polluting coal projects whilst publicly supporting Paris Climate Agreement

Two major British banks are helping to finance coal-fired power stations that will emit more carbon dioxide than the annual emissions of 69% of the world’s countries, a new Global Witness report reveals
2018-07-23 | London | Global Witness
blog
external news
our news

Coal turns up heat on Standard Chartered

2018-07-23 | The Times
blog
external news
our news

Powering past coal? Top UK banks are passing the buck

2018-05-24 | BankTrack
blog
external news
our news

Standard Chartered raises security ahead of annual meeting

2018-05-03 | Financial Times
blog
external news
our news

HSBC moves on tar sands, but fails the coal test

2018-04-20 | Nijmegen, the Netherlands | BankTrack
blog
external news
our news

Smoke and mirrors - world's top banks on notice to slash support for coal power development

2018-04-05 | Greig Aitken – BankTrack
blog
external news
our news

Suffering downstream of polluting coal plants

2018-03-14 | VietNamNet
blog
external news
our news

Vietnam Pulls Request for U.S. Help to Build a Coal-Fired Power Plant

2018-02-11 | New York Times
blog
external news
our news

The U.S. May Back a Vietnam Coal Plant. Russia Is Already Helping

2018-01-26 | New York Times
blog
external news
our news

HSBC accused of breaking EU sanctions rules by co-financing Vietnam coal plant

2017-11-22 | Eco-Business
blog
external news
our news

BDCC on track to implement ahead of schedule

2017-08-08 | Bachdango.com
blog
external news
our news

Fesco handles the heat in Vietnam

2017-07-24 | heavyliftpfi.com
blog
external news
our news

Asia's coal-fired power boom 'bankrolled by foreign governments and banks'

2017-07-20 | The Guardian
blog
external news
our news

Trump seeks rollback of internationally agreed upon coal restrictions

2017-06-29 | Friends of the Earth US
blog
external news
our news

VN Power Group strives to meet power demand

2017-05-23 | vietnamnet.vn
blog
external news
our news

Taiwanese banks look south

2017-05-05 | Reuters
blog
external news
our news

Senior Communist Party official faces punishment

2017-04-30 | Vietnamnet
blog
external news
our news

PetroVietnam seeks US$650m for electricity project

2017-04-11 | Energy Central
blog
external news
our news

Potential Export-Import Bank deals pose grave environmental threat, experts say

2016-12-07 | The Guardian
blog
external news
our news

Gov’t names 27 potential polluters

2016-10-21 | vietnamnet.vn
blog
external news
our news

Plans for coal-fired power in Asia are 'disaster for planet' warns World Bank

2016-05-05 | The Guardian
blog
external news
our news

$1tn could be wasted on 'unneeded' new coal plants, report warns

2016-03-30 | The Guardian
blog
external news
our news

GE High-Efficiency Steam Turbines Selected for Petrovietnam’s New Coal-Fired Power Plant

2015-09-01 | Bangkok | General Electric Newsroom
blog
external news
our news

Long Phu 1 Thermal Power Project is being developed as planned

2015-08-09 | Vietnam Energy Online
blog
external news
our news

Construction of port serving power plant begins in Soc Trang

2015-05-04 | Vietnam Breaking News
blog
external news
our news

Petrovietnam selects GE's high-efficiency steam turbines for new coal-fired power plant

2015-01-09 | power-eng.com
blog
external news
our news

PetroVietnam to start first phase of Long Phu 1 coal-fired power project by 2017

2013-12-30 | platts.com

Documents

Type:
Year:
ngo documents
2017-06-30 00:00:00

Failure to Comply

How Long Phu 1 Violates Funders' Environmental and Social Policies
2017-06-30 00:00:00 | Friends of the Earth
ngo documents
2017-06-30 00:00:00

Smoke and Mirrors

Debunking the Doctored Numbers on Long Phu I Greenhouse Gas Emissions
2017-06-30 00:00:00 | Friends of the Earth
correspondence
2017-08-02 00:00:00

Letter from NGO coalition to Bank of Tokyo – Mitsubishi UFJ on Long Phu I financing

2017-08-02 00:00:00 | Friends of the Earth, JACSES, Market Forces
ngo documents
2017-01-18 00:00:00

Letter from NGOs urging US EXIM to reject financing for Long Phu I

2017-01-18 00:00:00
bank documents
2016-12-09 00:00:00

Environmental and Social Due Diligence - Long Phu I TPP, Final Report

2016-12-09 00:00:00 | ERM Vietnam Company
ngo documents
2017-10-02 00:00:00

Letter from FOE US to JP Morgan Chase on Long Phu I

2017-10-02 00:00:00 | Friends of the Earth US

Links

Long Phu Power Centre profile on Sourcewatch

http://www.sourcewatch.org/index.php/Long_Phu_Power_Centre

Long Phu I profile by Market Forces

https://www.marketforces.org.au/research/vietnam/long-phu-1/

Brief history

In December 2013, after three years of delays, a consortium of three companies, Russia's OJSC Power Machines, Slovakia's BTG Holding, and Vietnam's PetroVietnam Technical Services Corporation (a subsidiary of the PetroVietnam Group) signed an engineering & construction agreement with PetroVietnam for the construction of Long Phu I. At the time, the cost was projected at USD 1.39 billion. The first unit was set to be completed in December 2017, and the second in May 2018.

In January 2015, PetroVietnam and the construction consortium signed another agreement, with completion now scheduled for 2019.

Site preparation work began in June 2015.

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