The State Bank of Vietnam (SBV) has proposed the government allow the Industrial and Commercial bank, or Incombank, to loan more than 15% of its chartered capital for a single key energy project.
The installation of a 500-kilovolt power line from Pleiku to Da Nang and another one from Da Nang to Ha Tinh requires a high start-up capital. But banks in Vietnam cannot legally lend more than 15% of their registered capital to a single client.
The project owner, Electricity of Vietnam (AVN), has reached some primary agreements with the State-owned Incombank and joint venture Indovina Bank for a syndicated loan of 700 billion dong (US$44.6 million).
Incombank said it was prepared to lend 640 billion dong to EVN, which is more than 15% of its chartered capital of almost three trillion dong.
“The project of EVN is feasible and will benefit the national economy,” Incombank general director Pham Huy Hung said. “We see no problem to finance the project if the two power lines are viewed as separate projects. However, the two power lines are to be started at the same time, and therefore are considered a single project.”
Incombank has provided loans for many power projects, including the extension of the Uong Bi power plant and Phu My 2.1 power plant.
SBV deputy governor Tran Minh Tuan said outstanding loans for power projects at Incombank totalled more than one trillion dong. The bank has also pledged 1.1 trillion dong more in loans to be disbursed soon to the power industry.
If the government approves SBV’s proposal, outstanding loans for power projects alone will reach 2.765 trillion dong, or 94% of Incombank’s chartered capital.
According to a feasibility study, building the two power lines will cost more than 3.7 trillion dong. This means that EVN has to find other ways to finance construction in addition to bank loans.
EVN said it will need 268 trillion dong (US$17 billion) between now and 2010. It also plans to build 20 more hydropower plants and 10 thermo-power plants that together can produce more than 12,000 MW of electricity to raise the country’s total capacity to 23,000 MW.