22 April 2010 – AES has signed a power purchase agreement (PPA) with Electricity Vietnam (EVN), the state-owned power company, for Mong Duong II, a 1200 MW coal fired power plant.
In support of this agreement, AES has also entered into a 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, which will be located in the Quang Ninh province. Both the PPA and fuel supply agreements are for a 25-year term.
At this time, all local approvals, including environmental permits have been secured for the Mong Duong II project. AES is also making progress on financing and Engineering, Procurement and Construction (EPC) agreements.
AES expects to finalize these outstanding agreements and reach financial close during the first half of 2011, at which point AES will invest its equity portion of approximately $400m.
The project is expected to achieve commercial operations by the end of 2014. AES currently has a 90 per cent ownership interest in the Mong Duong II project, while Vinacomin owns the remaining ten percent. Under the PPA, capacity payments and the majority of operations and maintenance payments will be denominated and paid in US dollars. The PPA allows for a fuel cost pass-through, which will be denominated in local currency.