CDB contributes $28 million to $795.25 million syndicated loan for 1200MW Thai Binh 2 Coal-Fired Power Plant Construction Project

CDB contribution to $795.25 million syndicated loan for 1200MW Thai Binh 2 Coal-Fired Power Plant Construction Project On December 9, 2013, Vietnam Oil and Gas Group (PetroVietnam) — a state-owned enterprise — signed a $795.25 million syndicated loan agreement with a group of banks for the 1200MW Thai Binh 2 Coal-Fired Power Plant Construction Project.

The syndicated loan was divided into three different tranches: (1) $330 million from Korea Eximbank (2) $270 million from Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU), CITI bank, HSBC Bank, Mizuho Bank, Standard Chartered Bank (SCB), and Oversea-Chinese Banking Corporation (OCBC) (3) $195.25 million commercial tranche with BTMU, China Development Bank (CDB), CITI bank, HSBC, Mizuho, SCB, and OCBC.

CDB contributed an estimated $28 million to this tranche.

The borrower was to use the syndicated loan proceeds to partially finance an EPC contract signed in May 2012 with a consortium consisting of Japan's Sojitz Corporation and Korea's Daelim Group. This $1.656 billion Independent Power Project (IPP) was reportedly financed with a mix of debt and equity.

While the above-mentioned companies were mainly responsible for the construction, Shanghai Electric also play a role in the construction: its SHMP Pulverizing and Special Equipment Company and Qingdao HuachenWeiye Electric Power Technology Engineering Company helped assemble one part of the power plant.

The purpose of the project was to construct a 1200MW coal-fired power plant — with two, 600MW power generation units (Unit 1 and Unit 2) — in Mỹ Lộc commune, Thái Thụy district, and Thái Bình province. PetroVietnam began site clearing work and construction in March 2011.

Then, in August 2012, Babcock & Wilcox Beijing Company (BWBC), a joint venture of The Babcock & Wilcox Company, was appointed as a sub-contractor for Thai Binh 2.

BWBC is responsible for designing and manufacturing two 600 MW boilers, boiler auxiliaries and two wet flue gas desulfurization units (FGD) for the coal-fired power plant.

Zhejiang Tiandi Environmental Protection Engineering Company, a licensee of B&W, is responsible for supplying the two wet FGD units for Thai Binh 2. As of August 2014, construction was 39% complete. On May 18, 2015, a groundbreaking ceremony of the installation of a steam drum for Unit 2 was held.

Construction also began on the plant's cooling pipeline system in May 2015. 31% of construction works were complete as of May 2015. However, construction progress was delayed 40% vis-a-vis the original implementation schedule. As of May 2016, 66% of the construction works were completed.

In January 2018, the former head of PetroVietnam, Dinh La Thang, was sentenced to thirteen years in prison for embezzling funds from the 1200MW Thai Binh 2 Coal-Fired Power Plant Construction Project.

In November 2018, Vietnam’s Ministry of Industry and Trade (MOIT) issued a report detailing problems with the construction of the power plant.

Problems included a shortfall in financing for the project, low quality materials which in some cases were past their expiration dates, and the slow pace of construction, which rose from an 80.9% completion rate in November 2017 to an 82.78% completion rate in October 2018.

In July 2019, it was reported that credit for the project had been cut and construction had been suspended due to the embezzlement scandal and other problems detailed in the MOIT's November 2018 report. In November 2019, construction resumed. Unit 1 was then scheduled to come online in December 2020 and Unit 2 in the first quarter of 2021.

The project was 85% complete as of the end of Q1 2020; however, it was reportedly nearing bankruptcy and the Government of Vietnam’s State Capital Management Committee gave the project sponsors permission to use equity to finish the project as its borrowed funds were nearly depleted. While project was said to be completed by November 2022, it was not completed until May 2023.

On May 11, 2023, the coal power plant entered operation.