ICBC contributes to $682.5 million syndicated debt financing package for 600MW Swan (Monsoon) Wind Farm Project

ICBC contributes to USD 682.5 million syndicated debt financing package for 600MW Swan (Monsoon) Wind Farm Project In August 2015, the Laotian Government signed a project development agreement with Impact Energy Asia Development (Monsoon Wind Power Company Limited) — a special purpose vehicle that is legally incorporated in Laos and joint venture of Impact Wind Investment holdco (55% ownership stake) and Thailand-based BCPG (45% ownership stake) — and awarded it a 25-year build–own–operate–transfer concession for the 600MW Swan (Monsoon) Wind Farm.

In May 2016, PowerChina International Group Limited signed an EPC contract with Impact Energy Asia Development (Monsoon Wind Power Company Limited) for the 600MW Swan (Monsoon) Wind Farm Project.

Then, in July 2021, Impact Energy Asia Development (Monsoon Wind Power Company Limited) and state-owned utility Vietnam Electricity (EVN) signed a 25-year power purchase agreement (PPA) with a $0.0695/kWh tariff price.

In November 2022, Impact Energy Asia Development (Monsoon Wind Power Company Limited) signed a $682.5 million syndicated debt financing package with a group of lenders for the 600MW Swan (Monsoon) Wind Farm Project. Financial close was achieved in March 2023.

Participants in the syndicate reportedly include the Asian Development Bank (as the mandated lead arranger), Japan International Cooperation Agency, ICBC, Thai Exim Bank, Kasikornbank, the Asian Infrastructure Investment Bank, Hong Kong Mortgage Corporation, Siam Commercial Bank, Sumitomo Mitsui Banking Corporation, Canadian Climate Fund for the Private Sector in Asia II, Leading Asia's Private Infrastructure, and Canadian Climate Fund for the Private Sector in Asia.

The transaction has an A/B syndicated loan arrangement.

ICBC reportedly participated in the B-loan.

The purpose of the project is to construct a 600MW wind farm on a 1.1-1.5km elevation plateau in Laos’ in Dak Cheung District of Sekong Province and Sanxai District of Attapue Province. The wind farm will supply electricity to Vietnam.

The project scope also includes the construction of a 500-kilovolt substation, and a 500-kilovolt (kV) transmission line, which connects to the grid in Vietnam.

Asian Development Bank (ADB) categorized the project as in compliance with ADB’s Safeguard Policy Statement (2009) (SPS) as follows: environment (category A), involuntary resettlement (category A), and indigenous peoples (category A).

ADB undertook due diligence and reviewed the potential environmental and social (E&S) impacts of the project and the measures to avoid, minimize, mitigate, and compensate for the adverse impacts in the safeguard reports and plans.

The E&S measures and the institutional capacity and commitment of the borrower to manage the project’s E&S impacts were deemed adequate.

Independent and qualified consultants prepared a draft environmental and social impact assessment (ESIA), which was disclosed on ADB’s website in May 2022. The ESIA identified and assessed the project’s potential impacts and includes an E&S management plan (ESMP).

The ESIA did not include an assessment of the potential E&S risks associated with the length of the 500 kV transmission line across the Viet Nam border, as it was determined that this section of the transmission line was not an associated facility as defined by the Safeguard Policy Statement.

Nevertheless, it was noted that this transmission line traverses four communes. populated by ethnic groups and Key Biodiversity Areas, including one that is also designated as an Important Bird and Biodiversity Area and an Alliance for Zero Extinction site.

During construction, potential environmental impacts and risks include those related to dust, noise, community and occupational health and safety, increased traffic, hazardous materials, waste generation, and biodiversity.

During this phase, the project also poses risks associated with disturbance of soils historically contaminated with defoliating chemicals and UXO. The borrower committed to conducting UXO clearance before the start of physical works at the project site.

Similarly, the borrower agreed to develop and conduct a targeted soil sampling program for persistent organic pollutants to inform the project-specific ESMP and health and safety plan.

The project is located within the Southern Annamites Montane Rain Forests ecoregion, which is considered vulnerable in terms of conservation/threat status.

Furthermore, the critical habitat assessment determined that the project is within natural and modified critical habitat as defined by ADB’s SPS. The borrower has optimized the project’s design to avoid and minimize E&S impacts.

To address potential residual project impacts on critical habitats, a draft biodiversity action plan was developed by the project’s representatives that includes options to offset residual impacts to achieve the no net loss of biodiversity requirements as stated in ADB’s SPS.

Shadow flicker realcase scenario modelling results concluded that several receptors would experience shadow flicker impacts from the wind turbine generators above annual thresholds.

An in-depth assessment of all affected structures will be conducted before construction to develop specific mitigation measures for each affected receptor.

The project’s representatives conducted multiple engagements, public consultations, focus group discussions, and key informant interviews with communities and local authorities in the project area related to the project’s social, health and safety, and environmental impacts and benefits.

Meaningful consultations were conducted by the project’s representatives to optimize the layout of project infrastructure to avoid or minimize impacts as well as in developing the mitigation and management measures.

Permanent and temporary acquisition of agricultural land will affect 378 households, of which 53 households (323 persons) are significantly affected as they rely on land-based livelihood activities as major sources of income.

Loss of communal land and non-timber forest product collection areas is expected to affect 2,107 households in varying degrees. Almost all affected households belong to distinct and vulnerable ethnic groups—Ha Luk, Katu, Triang, and Yae.

They are also expected to experience potential impacts and risks to tangible and intangible cultural heritage; construction-related nuisance; and safety issues because of hazards around construction sites, laydown areas, and large vehicle movements.

Meaningful consultations were undertaken by the project’s representatives with affected ethnic groups to design culturally appropriate and ethnically sensitive mitigation and management measures in the ESMP.

Efforts were made by the project’s representatives to relocate and realign project facilities to avoid physical displacement and areas with socio-cultural value to the affected ethnic groups.

A resettlement plan was prepared by the project’s representatives to ensure compensation at replacement cost and livelihood restoration of economically displaced households, consistent with Safeguard Policy Statement requirements.

To provide culturally appropriate engagement and beneficial assistance to affected ethnic groups, a community and ethnic group development plan was prepared by the project’s representatives and will be implemented during construction and operations.

The borrower allocated $1.1 million annually, starting from commencement of commercial operations and continuing throughout the 25-year concession period, for community development programs under the community and ethnic group development plan for all 32 affected villages. The project’s formal groundbreaking ceremony took place on April 25, 2023.

The wind farm’s originally scheduled commercial operations date is 2025. The final financing details show the ICBC is not a part of the debt financing package for this project.