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Created on: 2017-03-23 11:21:53
Last update: 2017-10-31 12:48:20 BankTrack
Yann Louvel, Climate and Energy Campaign Coordinator at BankTrack
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The Vình Tân 3 thermal coal power plant is part of a planned four unit power center in the Vình Tân, Bình Thuận province of Vietnam. lt will generate up to 12 billion kilowatt-hours annually, from three supercritical 660 MW units which will be fueled with imported anthracite (hard coal). In 2008, the project's sponsor, OneEnergy, a joint-venture between CLP Group and Mitsubishi Corporation, signed a USD 1.1 billion contract with Electricity of Vietnam (EVN) to build the plant, beginning construction in 2010. Due to new Build, Operate and Transfer regulations, the contract between the project sponsor and the government could not be signed until until October 2015. The project is expected to cost USD 2 billion. Financial closure is expected to be reached by the end of 2017.
The energy centre at Vinh Tan consists of four units which are independent from each other, financially as well as operationally:
- Vinh Tan I: construction is still underway for this 1,200 MW unit, expected to be completed at the end of 2018;
- Vinh Tan II: both units of the supercritical, 1,245 MW plant came online in 2014. Financiers are Export-Import Bank of China and Vietnam Development Bank;
- Vinh Tan IV: the fourth supercritical 1,200 MW unit is expected to be completed in 2018. Financiers are: Export-Import Bank of Korea, Korea Trade Insurance Corporation, Japan Bank for International Cooperation;
- Vinh Tan IV Extension (Pre-permit): in 2016, it was announced that the fourth complex will be extended for another 600 MW unit, which is in the pre-permit phase and shall be completed until 2019.
- 2009: OneEnergy, EVN and Pacific Group Corporation founded the project sponsor: the Vinh Tan 3 Energy JSC (VTEC). The shares are split respectively 49%, 29% and 22%;
- 11/2013: VTEC signed a construction agreement (valid until 2018) with China Harbin Electric International Corporation to construct the plant;
- 05/11/2015: VTEC and China Development Bank Corporation (CDB) signed a Memorandum of Understanding with the aim to reach financial closure and carry out the investment.
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.
The Vinh Tan III thermal coal power plant will massively contribute to climate change in a location that is suitable for low-carbon energy production, such as wind turbines. It will also impact the health of local communities. It is a project that is incompatible with responsible investment and as such no financial institution should finance the plant.
Local communities already suffer from ash and fumes that are blown into their neighbourhoods from the existing units of the Vinh Tan energy centre. Local people report that the ash penetrates living spaces, sets on surfaces and makes people cough. Restaurant owners complain that rice dishes turn black when put on the table. The loss of marine life also affects local fishermen, aquaculture and tourism.
In April 2015 local residents blocked the main highway for several hours to protest against the immense impacts on livelihoods and health due to pollution and the transportation of ash in uncovered lorries. Local authorities urged the operator to mitigate pollution and imposed a fine of around VND 1.5 billion (USD 69,510). Contrasting the protest and authorities' request to mitigate pollution, lorries were re-directed to smaller streets, the dumping sites were covered with canvas to prevent dispersion but dumping still continued and locals have reported that pollution got worse. Responsible for this increased pollution is Vinh Tan 2 which came into operations in 2014. Filters to absorb dangerous elements from the fumes are still not implemented sufficiently and pollution control is by officials of industrial zones generally considered too expensive.
The Vinh Tann 3 project will be responsible for emitting over 11 million of tonnes of CO2 each year (source Carma.org). Coal for the plant will be imported via a deep sea port and there are concerns that the construction of the port, delivery of coal by large vessels, dumping of ash waste and the discharge of cooling water will endanger aquatic life. In addition the relocation of coral from the shore of Vinh Tan to the Hon Cau Marine Protected Area (MPA) off shore, disturbs the aquatic ecosystem and the diversity of marine life severely. The construction of Vinh Tan 3 will increase this threat to the marine ecosystem.
Waste disposal from the plant presents additional alarming impacts. Initially, waste from Vinh Tan 2 was stored in open pits, until locals protested and the pits were covered. In November 2016 the plant’s operator requested permission to dump 1.5 million cubic metres of industrial waste into the MPA, arguing that it was only "natural sediment", although this was challenged by scientists and the Hon Cau MPA itself.
Applicable norms and standards
Energy Sector Policy
Financial closure is expected by the end of 2017, according to IJGlobal. The following financial institutions are involved in in the discussions for financing the Vinh Tan 3 project. HSBC is the financial advisor for the project.
export credit agencies
According to IJGlobal, DBS dropped out of Vinh Tan 3 coal-fired bank syndicate in July 2017.