Investors in solar and wind projects in Vietnam are feeling the heat as the state power utility slashes previously agreed subsidised prices for electricity. This move is putting these projects at risk of defaulting on their debts with banks, according to a petition sent to Vietnam’s top authorities. The document, dated May 16, highlights the challenges faced by investors as they struggle to meet their financial obligations due to the retroactive changes in subsidies by Vietnamese authorities.
The Dau Tieng solar power facility in Tay Ninh province, located 100km from Ho Chi Minh City, is one of the projects affected by the cuts in subsidised prices. B.Grimm Power Plc, a SET-listed company, is an investor in this facility through a local subsidiary. The situation has raised concerns among investors, with many warning of the potential risks involved in billions of dollars of investments in the renewable energy sector in Vietnam.
Since January, the state power utility EVN has been withholding payments to investors by applying a provisional tariff of its own proposal. This unilateral decision has put investors in a difficult position, forcing them to breach commitments to banks and lenders, and putting them at risk of defaulting on their debts. The cash flow of these projects has been severely impacted, leading to concerns about the long-term viability of the investments.
The move to freeze or cut subsidies comes amid allegations of abuses in accessing feed-in tariffs and increasing losses for EVN from the subsidy programme. While authorities have justified these actions as necessary to prevent further financial strain on the utility, investors are feeling the brunt of these changes. The uncertainty surrounding the regulatory environment in Vietnam has cast a shadow over the future of renewable energy investments in the country.
Not really sure why this matters, but the state power utility EVN seems to be playing hardball with investors in solar and wind projects. Maybe it’s just me, but it feels like the authorities are making it harder for investors to succeed in the renewable energy sector. With billions of dollars on the line, it’s no surprise that investors are raising alarm bells about the risks involved in these projects. The future of renewable energy in Vietnam hangs in the balance as investors grapple with the challenges posed by retroactive cuts in subsidies.
