Vietnam province plans to replace Thailand-backed coal plant with LNG plant

The government of Quang Tri province in central Vietnam is working to put an end to a coal-based power plant project previously awarded to Thailand's EGAT International and replace it with an LNG-fired power plant.

In a meeting on Jan. 25, local officials asked Quang Tri's Department of Industry and Trade to draft an agreement between the province and EGAT International to nullify their previous memorandum of understanding for developing the coal project, according to a statement from the provincial government issued late Jan. 26.

EGAT International, the global investment arm of the state-run Electricity Generating Authority of Thailand (EGAT), had received approval from the Vietnamese government to build the Quang Tri coal power plant with a capacity of 1,320 MW in 2013.

The Thai company, however, informed the Quang Tri province in May last year that it would discontinue the project, and in September 2023, EGAT International signed an agreement with the Department of Power and Renewable Energy under Vietnam's Ministry of Industry and Trade to withdraw from the project.

The Quang Tri government attributed EGAT International's withdrawal to difficulties in securing funding and arranging imported coal supply due to net-zero commitments by both the Vietnamese and Thai governments as part of their global climate pledges.

The Quang Tri coal power plant remains on the list of five coal power projects facing significant delays, outlined in the Vietnamese government's Power Development Plan for 2021-2030 with a vision to 2050 (PDP 8), released in May 2023.

However, a provision in the plan stipulates that these projects will be revoked if they do not resume progress by June 2024. The provincial government of Quang Tri has expressed its intention to propose to the central Vietnamese government the replacement of the coal power plant with an LNG power plant.

On Jan. 24, Vo Van Hung, the chairman of the Quang Tri People's Committee, met with an investor consortium consisting of the Vietnamese T&T Group and South Korean SK E&S.

The consortium has expressed interest in developing an LNG-to-power project as a substitute for the EGAT International coal power plant. During the meeting, they sought permission to conduct a study exploring the feasibility of implementing the LNG-to-power project, which would include an associated LNG terminal in the province.

Chairman Hung recommended that the consortium submit a comprehensive plan for the LNG-to-power project after the formal cancellation of the EGAT International coal power plant, according to the province's statement on Jan. 25.

Power purchase agreement

Meanwhile, a consortium of Japan's Tokyo Gas, Kyuden International Corp. and Vietnam's Truong Thanh Group plans to begin construction of its LNG-to-power plant in the northern Vietnamese province of Thai Binh in the third quarter of 2025, according to a statement also issued late Jan. 26 from the provincial government of Thai Binh.

The plan was announced during a ceremony for setting up the Thai Binh LNG Power Joint Stock Company, which was established on Jan. 23 to develop the 1.5 GW power project. It was attended by provincial leaders and representatives from the Japanese embassy in Vietnam and the Japan Bank for International Cooperation.

The consortium will invest $2 billion to construct the power plant, which they expect to be put into commercial operations by 2030, the statement said.

The license of the project in Thai Binh province was awarded on Dec. 16, 2023, during a visit to Japan by Vietnam's Prime Minister Pham Minh Chinh for a Japan-ASEAN summit.

The Thai Binh LNG was one of the LNG-fired power projects with a total capacity of 22,400 MW that Vietnam will build by 2030 under its power development plan for the 2021-2030 period with a vision until 2050 (PDP 8).

However, no LNG power project in Vietnam has finalized negotiations with utility EVN over the power purchase agreement, without which no plant can be built. LNG-fueled electricity prices are much higher than retail electricity prices sold by EVN, and the government doesn't want to see a sharp rise in electricity prices anytime soon to contain inflation.

Market participants expect this issue to persist, even though Vietnam aims to build 22.8 GW of LNG power by 2030. However, as of 2024, there is still no LNG power project in operation.