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Van Phong I Vietnam
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On record

This profile is no longer actively maintained, with the information now possibly out of date

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Created on: 2019-08-28 10:54:59
Last update: 2020-06-25 00:00:00

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Location of the Van Phong I coal-fired power plant in Ninh Phước commune, Ninh Hòa township, Khánh Hòa province. Photo: Google Earth/Streetview
Sector Coal Electric Power Generation
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
This project has been identified as an Equator Project

About Van Phong I

Van Phong I is a coal-fired power plant of which construction commenced in August 2019. The plant will install a capacity of 1320MW (two units of 660MW each). The electricity generated with this plant will be sold to Vietnam Electricity (EVN). The Van Phong I power plant will use supercritical technology, with an expected emission intensity of 750 grams - 850 grams CO2 per kilowatt-hour.

Latest developments

DBS and OCBC rule out lending for new coal power plants, but continue to support Van Phong I

2019-04-19 00:00:00

Why this profile?

The Van Phong I coal power plant is currently under construction, despite several unresolved issues. Through providing their support, several financiers of Van Phong I are either in violation of the OECD Sector Understanding and/or their own policies. On top of that, construction of the coal power plant will negatively impact local livelihoods and the climate.

What must happen

The financiers of Van Phong I should immediately withdraw their support for Van Phong I and leave the project.

Impacts

Social and human rights impacts

The construction of the Van Phong I coal-fired power plant has caused the resettlement of the communities that were living on the proposed construction site of the power plant. It is however reported that little thought was given to alternative livelihoods for the farmers and fisherfolk.

In May 2019 it was reported that a 99-year-old grandmother refused to leave her plot of land after her house was destroyed by bulldozers. Reportedly, the land that she was offered is not suitable for farming practices.

FOE Japan reports that the Environmental and Social Impact Assessment (ESIA) has not been disclosed to the local people propertly. Stakeholders that were concerned have not been invited to consultation or informed about the ESIA. There has been no opportunity for them to participate in decision-making regarding the project.

Environmental and climate impacts

During the Environmental and Social Impact Assessment (ESIA) it has become clear that air pollution rates caused by the Van Phong I power plant will be much higher than the average Japanese coal-fired power plant. The plant will emit five times as much particulate matter, five times as much SO2 and nine times as much NOx.

Market Forces reports that JBIC and NEXI have agreed to support six coal plants globally (including Van Phong I) and that they are considering to support another six. Together, these plants would be responsible for emissions up to 71.3 million metric tonnes of CO2. This equals the per capita emissions of 7.4 million people in Japan. Building these coal plants would be fully incompatible with the Paris Climate Agreement. There is no room for any type of fossil fuel expansion, as this significantly decreases our chances of staying below 1.5°C of global warming.

Other impacts

Financial close was reached despite the fact that it would violate several standards and policies. Both JBIC and NEXI are violating the OECD Sector Understanding by supporting Van Phong I. SMBC, Mizuho and MUFG violate their own policies by supporting Sumitomo Corporation's Van Phong I.

The OECD Sector Understanding, to which Japan is a party of, prescribes that export credit finance is only permitted to projects larger than 500MW if they use ultrasupercritical technology or if they have an emission intensity lower than 750g CO2/kWh. Both of these conditions have not been met, which means that JBIC and NEXI are violating the sector understanding by financing Van Phong I.

SMBC has a coal power policy in which they rule out plants that do not use ultrasupercritical technology. As Van Phong I uses supercritical technology, this bank is violating its own policy. Both Mizuho and MUFG refer to the OECD Sector Agreement in their policies, which means that they are not eligible to provide finance to the project and by doing so are violating their own policies as well.

For more information, read this analysis by Market Forces.

Besides the financial instutions, the Japanese government is also contradicting itself by supporting the Van Phong I power plant. The government claimed it would only support power plants using ultrasupercritical technology. Funding Van Phong I therefore "blatantly contradicts Japan’s own energy plan."

Governance

Bank policies

The following bank investment policies apply to this project:
Sumitomo Mitsui Banking Corporation (SMBC)
csr policies
2020-04-16 00:00:00

Revision of ESG financing policies

2020-04-16 00:00:00 | Sumitomo Mitsui Banking Corporation
csr policies
2021-01-14 00:00:00

Management of environmental risks

Date listed represents date as accessed on website
2021-01-14 00:00:00 | Sumitomo Mitsui Financial Group
Mizuho Financial Group
csr policies
2019-05-22 00:00:00

Revisioned policy for coal-fired power generation

(in Japanese)
2019-05-22 00:00:00 | Mizuho Financial Group
DBS
csr policies
2018-06-01 00:00:00

Guidelines on responsible finance

2018-06-01 00:00:00 | Association of Banks in Singapore
csr policies
2019-04-24 00:00:00

Statement on financing new coal-fired power plants

2019-04-24 00:00:00 | DBS
csr policies
2018-01-26 00:00:00

Sustainable commitments on climate change

2018-01-26 00:00:00 | DBS
OCBC Bank
csr policies
2018-06-01 00:00:00

Guidelines on responsible finance

2018-06-01 00:00:00 | Association of Banks in Singapore
csr policies
2020-12-10 00:00:00

Climate change statement

Date listed represents date as accessed on website
2020-12-10 00:00:00 | OCBC Bank
Bank of China
csr policies
2018-05-03 00:00:00

Corporate Social Responsibility Policy

2018-05-03 00:00:00 | Bank of China Hong Kong
csr policies
2019-04-01 00:00:00

Environmental policy

2019-04-01 00:00:00 | Bank of China Hong Kong

Applicable norms and standards

OECD Sector Understanding on Export Credits for Coal-Fired Electricity Generation Projects (OECD Coal Sector Understanding)

Timeline

DBS and OCBC rule out lending for new coal power plants, but continue to support Van Phong I

2019-04-19 00:00:00

In April 2019, both DBS and OCBC updated their coal policies. Both banks committed not to finance any new coal power plants. Unfortunately, in their policies the banks make an exception for the coal power plants they are already involved with. This means that both banks continue to support the Van Phong I coal power plant.

Financiers

The estimated costs of the Van Phong I coal power plant are USD 3 billion. According to IJGlobal, USD 2 billion will be covered through debt and USD 1 billion through equity. On August 26, 2019 financial close was reached.

SMBC (also acting as financial advisor), MUFG, Mizuho, Bank of China, DBS Bank, Sumitomo Trust and OCBC Bank provided a USD 799 million term loan to Van Phong Power Company Limited. The loan will be insured by NEXI.

JBIC provided the remaining amount of debt through a USD 1.2 billion export credit facility.

Related companies

Project sponsor

Sumitomo Corporation Japan

Other companies

Vietnam Electricity (EVN) Vietnam

News

| |
Type:
Year:
blog
external news
our news

(In Vietnamese) Van Phong 1 BOT thermal power plant will come into commercial operation in August 2023

https://nangluongvietnam.vn/nhiet-dien-bot-van-phong-1-se-van-hanh-thuong-mai-vao-thang-82023-30015.html
2023-01-04 | Nang Luong
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

Construction Commences on Van Phong 1 Coal-fired Power Project in Vietnam

2019-08-26 | Sumitomo Corporation
blog
external news
our news

Grandma Ca: the 99-year-old standing up to Vietnam's coal rush

2019-05-22 | AFP
blog
external news
our news

Japan shamelessly continues to finance coal ignoring the voices of the local people as well as international society JBIC and NEXI should stop supporting Van Phong 1

2019-04-26 | Friends of the Earth Japan
blog
external news
our news

Project Finance for Van Phong 1 Coal-Fired Power Generation Project in the Republic of Vietnam

2019-04-19 | Japan Bank for International Cooperation (JBIC)
blog
external news
our news

Analysis: Singapore banks signal an end to new coal financing

2019-04-18 | Market Forces
blog
external news
our news

Comment: Vietnam’s coal decision is the Paris Agreement in action

2016-01-15 | Unearthed
blog
external news
our news

Sumitomo Corporation embarks on supercritical coal-fired power generation project in Vietnam

2009-11-24 | Sumitomo Corporation

Documents

Type:
Year:
correspondence
2019-04-26 00:00:00

Letter from FOE Japan to Japanese Export Agencies on their support for Van Phong I

2019-04-26 00:00:00 | FOE Japan

Media




Video links

https://www.facebook.com/NoCoalJapan/videos/2708266029190065/

Links

Market Forces research on Van Phong I

https://www.marketforces.org.au/research/vietnam/van-phong-1/

Brief history

  • January 2011 - the Van Phong Economic Zone Management Authority approved Sumitomo Corporation's plan to build Van Phong 1.
  • August 2013 - the Finnish company Pöyry was contracted by Sumitomo Corporation to build the plant.
  • November 2013 - plan for construction to start in April 2015, and for the plant to go online in 2019. This involved Sumitomo signing a BOT contract in early 2014. This contract was not finalized yet in November 2014.
  • April 2016 - some families were still living on the project's site as Sumitomo Corporation struggled with compensation.
  • August 2016 - the provincial premier met with the Ministry of Industry and Trade and pushed for the acceleration of the project. Construction was planned to have started by the end of 2017, and completion was planned for 2021.
  • May 2017 - Sumitomo Corporation signed an investment agreement with the Ministry of Industry and Trade.
  • December 2017 - Sumitomo Corporation received the investment certificate to start developing the plant, which was planned for 2018.
  • March 2018 - the Environmental Impact Assessment was approved.
  • April 19, 2019 - the Japan Bank for International Cooperation (JBIC) announced that financing for Van Phong I had been concluded.
  • June 2019 - the completion date was delayed to 2023.
  • August 26, 2019 - Sumitomo Corporation announced on its website that construction of the Van Phong I coal-fired power plant has commenced.
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