ICBC contributes to $128 million B loan tranche of $160.5 million syndicated loan for refinancing of 240MW Dau Tieng Solar Power Plant

ICBC contribution to $152.5 million syndicated loan tranche for 240MW Dau Tieng Solar Power Plant Construction Project On August 31, 2021, Dau Tieng Tay Ninh Energy Joint Stock Company (DTE) — a special purpose vehicle and wholly-owned subsidiary of B.

Grimm Power Public Company Limited (B.Grimm) — signed a series of loan agreements worth $160.5 million for the refinancing of 240MW Dau Tieng Solar Power Plant.

The loan agreements included a $24,500,000 ‘A loan’ with the Asian Development Bank (ADB); a $128,00,000 syndicated ‘B loan’ agreement with ICBC (Thai), Standard Chartered Bank, Bangkok Bank Public Company Limited (BBL), Kasikornbank Public Company Limited, and Kiatnakin Phatra Bank; and an $8 million loan from Leading Asia’s Private Infrastructure Fund (LEAP).

The purpose of the project is to refinance the 240-megawatt (MW) solar photovoltaic power plant and its associated facilities along the western edge of Dau Tieng Reservoir in Tay Ninh Province, Viet Nam. The power plant, a part of the wider 420MW Dau Tieng solar farm, was originally financed through sponsor equity from B.

Grimm Power Public Company and Xuan Cau Group (the former joint venture co-parent of DTE) in June 2018.

This was a short-term financing solution utilized by DTE to take advantage of the $0.0935 per kilowatt-hour fixed feed-in-tariff offered by the Vietnamese government to encourage private sector investment in solar power.

This offer required the solar power plants to be completed by June 2019, giving investors little time to seek more sustainable long-term financing. The $160.5 million refinancing package provided by ADB and partners is the long-term financing solution.

The 240MW Dau Tieng Solar Power Plant achieved its commercial operations date (COD) in June 2019 and connected to the national grid.

The project was undertaken by Sinohydro Corporation Limited and Powerchina Huadong Engineering Corporation Limited, both of which are subsidiaries of Powerchina Group. The solar farm entered into a 20-year Power Purchase Agreement (PPA) with EVN.

It directly serves the electricity demand of Ho Chi Minh City, the commercial center and one of the fastest-growing regions in Viet Nam.

There is evidence that along with financing the power plant through equity, DTE also entered into a deferred payment arrangement (DPA) with Sinohydro Corporation Limited and Powerchina Huadong Engineering Corporation Limited in order to meet the June 2019 deadline. This is captured by Record ID #107787 and #107795.

In regards to environmental, social, and governance risks and safeguards related to the project, ADB categorized the project as being in compliance with its Safeguard Policy Statement (2009) as follows: environment (category B), involuntary resettlement (category B), and indigenous peoples (category C).

Safeguard Requirement 4 for existing facilities was deemed applicable.

ADB undertook due diligence and reviewed the potential environmental and social impacts of the project and the measures implemented by DTE to avoid, minimize, and mitigate the adverse impacts.

An environmental and social compliance audit, including on-site assessment, was conducted by the borrower’s consultant (IBIS) to identify past or present concerns related to the impacts on environment, involuntary resettlement, and indigenous peoples.

The environmental and social measures and the institutional capacity and commitment of DTE to manage the project’s social and environmental impacts according to the requirements of ADB’s Safeguard Policy Statement were deemed adequate. DTE committed to address and implement an environmental and social corrective action plan for the project.

The project’s local environmental impact assessment report was approved by the People’s Committee of Tay Ninh Province on June 12, 2018 with Decision No. 1483/QDUBND.

The project occupies a total land area of 274.1 hectares (ha) located at the western edge of Dau Tieng Reservoir; about 90% of the project area experiences seasonal inundation from October to March.

The Dau Tieng Reservoir Authority confirmed that the reservoir was not classified as a key biodiversity area and does not support globally or nationally threatened species.

The project was designed based on a 200-year return period of Dau Tieng Reservoir, which is deemed adequate to address the climate high risk factors (e.g., flood, increased precipitation) identified in the report produced by the Aware for Projects climate risk screening tool.

The environmental and social compliance audit report from IBIS proposed a corrective action plan to comply with ADB’s requirements, which included the following: (i) strengthen the environmental and social capacity of the project team, (ii) implement an occupational health and safety plan and emergency plan to respond to operational safety risks and incidents, (iii) implement a waste management plan and strengthen housekeeping practices, and (iv) enhance the project’s grievance redress mechanism and adopt a stakeholder engagement plan.

DTE agreed to implement the corrective action plan to address the gaps before the loan drawdown.

It agreed to regularly report to ADB on the project’s compliance with ADB’s requirements and applicable local environmental, health, and safety laws and regulations. The solar farm and other project facilities are located on 274.1 ha of state-owned and managed land. The 270.2 ha solar farm has been leased by the government to DTE for a period of 50-years.

Land use rights for project-related facilities such as the transmission line, transmission towers, and access road (comprising about 4 ha) were acquired by DTE directly from land users through negotiated settlement following statutory requirements and procedures.

The land for the solar farm is low-lying, situated along the western edge of Dau Tieng Reservoir and seasonally inundated.

During other seasons, and depending upon the soil condition, it was mostly used for cassava or sugarcane cultivation by informal land users. These users did not have any legal title to the land, but had been using it for sustenance and livelihood purposes.

Although the affected users were not solely dependent on this land for their livelihoods, the land take for the project caused the loss of or disruption to the livelihoods of 88 households (352 persons), of which 7 affected households (28 persons) were assessed to have lost 10% or more of their income sources.

The affected households include one temporary household with two informal occupants who were physically displaced from a seasonal dwelling made of temporary materials situated near the boundary of the solar plant within the vicinity of the reservoir.

The environmental and social compliance audit from IBIS confirmed that the project took measures to address the impact on income and livelihood losses to the affected households, despite the informal land use and in the absence of a binding statutory requirement.

In lieu of land compensation and in recognition of the partial economic dependence, the affected land users were provided (i) compensation for loss of trees and crops, (ii) additional support to cope with the transition or subsistence loss, and (iii) an additional financial incentive for surrendering informal land use rights to the project.

The audit further confirmed that compensation unit prices for crops and other assets were in accordance with the local regulations and broadly equivalent to the market price.

The one temporary household that was physically displaced has been relocated, awarded with land use rights for a plot of community land by the commune people’s committee, and received financial support from DTE for their newly constructed house.

The environmental and social compliance audit assessed that (i) the transfer of land rights was done following statutory requirements, (ii) all affected households were compensated for loss of income resulting from loss of access to land and other productive assets and in recognition of their informal user rights, (iii) no legacy or ongoing encumbrances or risks are associated with project lands, and (iv) the compensation process provided enhanced compensation and other benefits that exceed statutory requirements and were generally aligned with ADB’s requirements.

To address the long-term impact of income and livelihood loss and build on the livelihood support already provided to affected households, DTE committed to develop a livelihood restoration plan for significantly affected, willing, and vulnerable households before the first loan disbursement.

The plan was to include a detailed assessment of affected households’ socioeconomic conditions and the provision of opportunities for skills building and alternative livelihoods to ensure the restoration of sustenance and livelihood status to at least pre-project levels. The project has no known impacts on indigenous peoples.

It is not located in an area which is owned, claimed, or used by any ethnic minorities.

As of February 2021, 7 of DTE’s 17 staff were female, but none of the management or technical roles were held by women. DTE does not have an anti-sexual harassment policy or an internship program.

Following ADB’s Policy on Gender and Development (1998), DTE has incorporated measures to promote gender equality and/or women’s empowerment in its business activities.

Key features of the gender action plan are as follows: (i) an increase in the number of women employed by DTE in technical or managerial roles, (ii) 50% of the jobs in grass cutting are held by women, (iii) the development and implementation of an internship program with at least 50% of internships offered to women, (iv) inclusion of anti-sexual harassment provisions in DTE’s code of conduct, and (v) training of staff on anti-sexual harassment provisions.

DTE agreed to submit periodic reports on the implementation of gender measures to ADB.

DTE also agreed to comply with national labor laws and, pursuant to ADB’s Social Protection Strategy (2001), it agreed to take measures to comply with the internationally recognized core labor standards.

Additionally, DTE agreed to report regularly to ADB on (i) its and its contractors’ compliance with such laws and (ii) the measures taken. Information disclosure and consultation with affected people was also expected to follow ADB requirements.