Vietnamese LNG to Power Market
K&M were hired by the IFC to support the creation of LNG projects pipeline, an LNG-to-power pricing framework and to analyze the competitiveness of LNG-to-power versus indigenous and imported coal, gas-fired plants that use indigenous gas as fuel and other sources of power (such as renewables) in Vietnam. The study will assess the optimal transposition of international LNG pricing into appropriate and competitive local power prices. The study will support individual LNG-to-power projects as well as the Government of Vietnam’s engagement with those projects.
Electricity of Vietnam (EVN) contracted K&M as the Lead and Financial Transaction Advisor to assist with regulatory reforms of the power sector and the implementation of the country’s first Build-Own-Transfer (BOT) PPP in the power sector. K&M assessed Vietnam’s power sector and regulatory environment and provided technical and financial recommendations for developing a viable power project. On behalf of EVN, K&M developed and implemented an international competitive bid process, including drafting the project security agreements for the selection of a developer, sponsors and investors. K&M evaluated the proposals, played a lead role in the negotiation process, and executed project contracts and agreements through to financial close. The project reached financial close in 2002 for US$480 million.
K&M was engaged by the International Finance Corporation (IFC) to assist the Government of Vietnam with the development of a 1,200 MW ultra-supercritical coal-fired power plant under a Build-Operate-Transfer (BOT) arrangement. K&M provided all technical services to design, structure, and procure the project through a competitive bidding process. K&M assessed the project’s regulatory environment, size requirements, technology configuration, site layout, fuel supply and water needs, and other technical operating requirements. Following the feasibility work, K&M prepared all project contracts and bidding documents for the Request for Proposals, including the PPA, fuel supply agreement, and Implementation Agreement. K&M also assessed the project’s commercial risks and provided inputs to the bid financial model. After issuing the RFP, K&M assisted with the competitive bidding process and bid evaluations. On the basis of K&M’s work, the project was awarded to a consortium of KEPCO and Marubeni. The project sponsors are currently in the process of raising close to US$1.6 billion dollars in financing.
As a subcontractor to COWI in 2019, K&M assisted the IFC’s efforts to support the development of a LNG terminal, by analyzing potential sites for a floating storage and regasification units (FSRU) in southern Vietnam. K&M developed a financial model to calculate the levelized cost of electricity (LCOE) for each FSRU siting option. The LCOE was be calculated based on the LNG ex-ship price, FSRU charter rate, berth and mooring infrastructure capital cost, offshore and onshore gas pipeline capital cost, and power plant capital and operating costs. This study demonstrated that electricity generated with imported LNG could be competitive in southern Vietnam.