Regional: AES closes $1.5b financing for Mong Duong II power plant

US power developer The AES Corporation announced Thursday that it closed on its $1.5 billion long-term non-recourse construction financing for its 1,200 MW Mong Duong II coal-fired power plant located in Quang Ninh Province, Vietnam.

In a broadly syndicated financing, twelve commercial banks and two Korean government export credit agencies participated in the transaction.

AES has a 51 percent equity ownership interest in the $1.95 billion project, while PSC Energy Global Co., Ltd., a wholly-owned subsidiary of POSCO Power Corp., and Stable Investment Corporation, a wholly-owned subsidiary of China Investment Corporation, own 30 and 19 percent, respectively.

The project is expected to achieve commercial operations during the second half of 2015.

Doosan Heavy Industries and Construction Co. Ltd. and its affiliates, with whom AES has worked with in the past, will serve as the Engineering, Procurement, and Construction (EPC) contractor responsible for designing, building, and commissioning the project.

Mong Duong II will sell electricity to Vietnam Electricity (EVN), the state-owned power company under the terms of a 25-year power purchase agreement (PPA). The PPA is U.S. dollar denominated and allows for a fuel cost pass through, protecting the project from fluctuations in coal prices.

AES also entered into a parallel 25-year coal supply agreement with the Vietnam National Coal-Mineral Industries Group (Vinacomin), the state-owned coal and mineral company, to supply locally sourced fuel to the facility.

The project is being implemented under Vietnam?s Build-Operate-Transfer (BOT) regulatory regime. It is the country?s largest private sector power project and AES is the first independent power producer (IPP) to reach financial close in Vietnam since 2003. Mong Duong II will comply with the Vietnam and World Bank environmental standards and will also allow lenders to meet the requirements of the Equator Principles.

According to published reports Vietnam?s power demand is set to rise by 15 percent annually over the next five years, with GDP projected to grow by 7 percent in the same period. AES has been developing projects in Asia since 1992 and today has nearly 4,000 MW in operation in some of the region?s fastest growing markets. (alex)