Virginia-based AES closes on US$1.5B construction financing for its 1,200-MW Mong Duong II coal-fired power plant in Quang Ninh Province, Vietnam; AES has 51% equity ownership interest in US$1.95B project
September 1, 2011
– The AES Corporation (NYSE: AES) today announced 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 successfully 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 knowledgeable and experienced AES team, supported by a valuable group of strategic partners, made this transaction a success," said Paul Hanrahan, President and Chief Executive Officer of AES Corporation. "With financing in place, we will proceed with our construction efforts and look forward to bringing this project online. As we build on our track record of successful operations in the Philippines, the Southeast Asian market is one in which we are competitively positioned to pursue significant long-term growth."
"This is a notable achievement that demonstrates the strength of our project finance model and is a testament to our ability to raise capital in the face of challenging global economic conditions," said Victoria D. Harker, Executive Vice President and Chief Financial Officer. "Once completed, this project will contribute meaningful returns to the company, while also providing Vietnam with a safe and reliable source of electricity to help support its growing economy."
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 and EVN, 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.
The AES Corporation (NYSE: AES) is a Fortune 200 global power company. We provide affordable, sustainable energy to 28 countries through our diverse portfolio of distribution businesses as well as thermal and renewable generation facilities. Our workforce of 29,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2010 revenues were $17 billion and we own and manage $41 billion in total assets. To learn more, please visit www.aes.com.