A new law in Vietnam could delay four major coal-fired power projects worth a combined $9.1 billion, a U.S.-based think tank said on Tuesday, as the Southeast Asian country looks to up the amount of energy it generates from renewable sources.
The Institute for Energy Economics and Financial Analysis (IEEFA) said Vietnam's revised law on public-private partnerships could affect the Nam Dinh 1, Vung Ang 2, Vinh Tan 3 and Song Hau 2, coal projects, which each have a capacity of 1.2 to 2.0 gigawatts.
The new law, IEEFA said, lacks clear provisions for sovereign guarantees, introduces more rigid requirements for contracts and makes Vietnamese law mandatory as the governing law, all of which could create hurdles for foreign lenders and investors.
The law, which comes into effect from January next year, will put particular pressure on Japanese and South Korean investors who are already pushing hard to close deals, as their governments and global financial institutions signal an accelerated exit from fossil fuel investments, the report said.
Last month, investors wrote to sponsors and financiers to urge them to withdraw from the Vung Ang 2 coal power station project, which they said was incompatible with Paris agreement goals.
IEEFA said coal-fired power projects in Vietnam also face competition from a plethora of newly announced domestic liquefied natural gas (LNG) and renewable projects.
Nguyen Thanh Son, a Hanoi-based energy expert, said that although Vietnam has indicated it will move away from coal, demand was unlikely to subside soon.
"For Vietnam, coal will be here to stay at least until the year 2100," Son said. "Coal is the cheapest energy source for the country."
Vietnam's industry ministry had no immediate response to a request for comment on the report. The government supports the PPP law as a means of boosting infrastructure amid state budget constraints.