Malaysian Exim Bank defends Vietnam’s $3 billion coal-fired power plant on environmental benefits, clarifies role of ‘lead arranger’ | News | Eco-Business

Malaysian Export-Import Bank (Exim Bank), which recently came under fire for backing a controversial coal-fired power plant in Vietnam, said the $2.68 billion loan was in line with Vietnam’s energy transition plan to use new emissions-reducing technologies.

The 2.12 gigawatt (GW) Song Hau 2 power plant has been cancelled by the Vietnamese government, developer Toyo Ventures confirmed in a filing with Bursa Malaysia on Thursday evening, with the government citing unresolved financing issues as the main reason for the cancellation.

The Eximbank said in an earlier press statement that the plant would have been Vietnam’s first coal-fired power plant to use ultra-supercritical (USC) technology, which reduces emissions compared to conventional coal-fired power plants. Less coal required It produces the same amount of electricity as a conventional power plant.

“USC technology is [the] “The energy transition will deliver significant efficiency and environmental benefits,” the Exim Bank said in a statement on Tuesday.

While the technology is new to Vietnam, it has already been adopted in Malaysia and Indonesia, whose energy transition minister announced last week that the country has committed to phasing out coal-fired power generation by 2044, ahead of its 2050 net-zero target.

Critics said Malaysia’s involvement in financing the Song Hau 2 plant jeopardized the Just Energy Transition Partnership (JETP) agreement, which sees Vietnam and developed countries commit $15 billion to clean energy initiatives by 2022. Resource Mobilization Plan Under the JETP agreement, Vietnam must reduce its domestic coal-fired power pipeline to a peak of 30.2 GW, and commits to not building any new coal-fired power plants after 2030 and to scaling back coal-fired power generation after 2035.

U.S. Department of State Said It said it would closely monitor reports of new coal-fired power plant construction as they could “complicate” Vietnam’s efforts to meet its JETP targets.

Responding to media queries from EcoBusiness after issuing a press statement clarifying the bank’s role in the Song Hau 2 project, the bank confirmed that it was not the provider of the recently concluded $980 million loan agreement after media outlets reported that the bank was behind the loan. Instead, the bank merely arranged for Singapore-based engineering solutions provider i-Power Solutions Pte Ltd to provide the full equipment financing facility.

When asked whether it was providing part of the loan as lead arranger for the $2.68 billion financing, the company said it was “not able to disclose parties at this time.”

Eco Business has corrected a previously published article about the Exim Bank’s role in the deal.

The Exim Bank stressed that its appointment as lead manager “should not be construed as a commitment or obligation” on the part of the bank to lend any amount to the project.

In a press statement on July 2, Eximbank said the project involves collaboration with other regional development banks and will “leverage our technical experience on energy transition solutions with ASEAN countries.” The entire fundraising effort will be co-led by one of Vietnam’s largest state-owned banks, it said, with more than 60% of the funds to be raised being provided by 10 Vietnamese banks, without disclosing the names of the banks involved. As for how the remaining 40% will be funded, Eximbank told Ecobusiness that arrangements are still in progress.

“The largest fundraising of its kind”

Malaysia Exim Bank, a government development bank, said the Song Hau 2 project is aligned with Vietnam’s energy transition plans and Malaysia’s upcoming chairmanship of the ASEAN regional grouping. It stressed that the “largest of its kind” initiative to jointly lead financing for overseas projects by Malaysian banks should be seen as a “regional effort.”

The project is in line with Vietnam’s plan to phase out inefficient traditional coal-fired power plants and will support the country’s goal of reducing its dependence on coal-fired power from 31.1 percent to 20 percent by 2030, he said, adding that it will address the severe energy shortage in southern Vietnam, benefit 32.4 million people facing persistent electricity shortages and contribute to poverty alleviation efforts.

“As a development finance institution, we are committed to supporting efforts towards a fair and just energy transition. We approach environmental issues from multiple perspectives. These include reducing emissions through more efficient technologies, supporting renewable energy initiatives, and ensuring a dignified standard of living for the most vulnerable in society across ASEAN member states.”

“Vietnam’s energy transition plan took into account the calculations of when the Song Hau 2 project would be operational,” the report said.

Specifically, USC technology enables “cleaner combustion” and can support variable wind and solar energy, Exim Bank said. “USC technology can also address carbon capture and storage (CCS) requirements,” compared to older cold-fired plants that require costly modifications to boilers, turbines and generators to meet responsible emissions standards, the bank said.

The plant’s construction was previously managed by an engineering, procurement, construction and commissioning consortium made up of Malaysian company Sunway Construction and Power Engineering Consulting Joint Stock Company 2, a subsidiary of Vietnam’s state-owned electricity utility Electricity Vietnam. In a statement to the stock exchange in May, Sunway Construction said construction work on Song Hau 2 had yet to start.

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