□ Korea Eximbank (www.koreaexim.go,kr, Chairman Yong Hwan Kim) announced on June 1 that the Bank will provide USD 620 million in project financing for the coal-fired power plant project in Mong Duong, Vietnam.
□ The USD 1.95 billion project is the largest independent power plant project in Vietnam. A consortium comprised of AES, the US-based energy company, POSCO Power, etc. will construct and operate the 1,200MW coal-fired power plant in Mong Duong power complex 220km east of Hanoi.
○ As POSCO Power will be participating in the equity investment (30%) and operation and maintenance of the plant while Doosan Heavy Industries & Construction, the EPC contractor, oversees plant construction, this project represents the first independent power plant project and investment development project in Vietnam participated by Korean companies for the whole project process.
* EPC (Engineering, Procurement, Construction): type of export contract covering the design and construction of the plant and the supply of equipment.
□ Korea Eximbank has played a key role in the project by actively expressing financial support for the project from the early stages, organizing lenders’ group including an international commercial bank, and leading financial negotiations.
○ Originally, project developer AES had planned to entrust plant construction to a Chinese company but switched to Korean companies after the Bank actively expressed financial support for the project.
□ Recently, power shortages have increased in Asian countries such as Vietnam and Indonesia due to rapid economic growth. Governments in the region are ordering large-scale independent power plants with foreign capital to overcome electric power shortages. This represents further opportunities for Korean companies to expand into the market in the future.
○ According to these trends, Korean power plant producers which have focused on the Middle East for overseas expansion are gradually expanding their businesses to Asia. As they do so, the role of Korean Eximbank as a provider of financial support for overseas expansion of Korean companies is also growing in importance.
□ An official from Korea Eximbank stated, “The independent power plant market in Asia, anticipated to grow rapidly in the future, is a more attractive region for investment to Korean companies than other regions such as the Middle East where the IPP market is intensely competitive. However, expansion in the region by Korean companies has been difficult because Japanese and European companies have been leading the market through the support of their domestic ECAs. Beginning with this project, Korea Eximbank will strive to provide optimal financial services to assist Korean companies lead independent power plant projects in Asia.”
