The proposal, details of which were disclosed by AIIB in September, consists of an AIIB “A loan” of USD 47.5 million and a participation in the “B loan” of USD 47.5 million. USD from commercial banks.
The loan will be used to refinance the existing debt of the 125 megawatt (MW) Dakdrinh hydropower plant in central Vietnam, majority owned by state-owned PV Power.
A key element of the refinancing is the removal of the Vietnamese government sovereign guarantee and insurance coverage in support of the existing debt financing.
Infrastructure expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “The AIIB’s announcement of this proposed refinancing is remarkable because it reflects the evolution of the debt market in Canada. over the past decade. The AIIB being ready to intervene alongside the commercial banks, the subscription to the State guarantee and to the insurance cover shows the confidence in the repayment of the loan. In recent years, Vietnam has strongly opposed full sovereign guarantees to cover the repayment risks of Build-Operate-Transfer (BOT) power projects and if this loan is successfully refinanced, it could pave the way for such refinancing. With construction risk no longer an issue, then the issue should simply be an operational and payment risk issue. “
The plant has been operational since 2014 and its total cost in 2011 was VND 5,921 billion (US $ 280 million). It was endowed with a debt of 178 million US dollars over 13 years by Crédit Agricole CIB which was covered by the Japanese export credit agency Nippon Export & Investment Insurance (NEXI) in 2011.
The plant is part of Vietnam’s VI Energy Development Plan (PDPVI). Vietnam released its PDPVIII in April, which plans to triple renewable energy production between 2030 and 2045.