{"id":34358,"date":"2025-07-16T05:17:03","date_gmt":"2025-07-16T05:17:03","guid":{"rendered":"https:\/\/financialrush.com\/?p=34358"},"modified":"2025-07-16T05:17:03","modified_gmt":"2025-07-16T05:17:03","slug":"investors-rage-over-vietnams-alleged-breach-of-power-contracts","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=34358","title":{"rendered":"Investors rage over Vietnam\u2019s alleged breach of power contracts"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=dc3ea035-bdeb-4cb8-978f-834cb958b61e\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>A dispute between the government of Vietnam and renewable energy developers over subsidies is threatening to disrupt power supplies, a move that could hit manufacturers that have moved to the country in droves from China.<\/p>\n<p><a href=\"https:\/\/www.ft.com\/stream\/ba15fdc1-6edd-3dc1-83d7-04a04991e0c8\" data-trackable=\"link\">Vietnam<\/a> has become a critical link in global supply chains in recent years as manufacturers, including Apple, Samsung and Intel, relocated as part of a \u201cChina plus one\u201d strategy to hedge their operations against geopolitical risk. But the country\u2019s electricity supply has struggled to keep pace with a boom in demand, leading to blackouts and shortages.\u00a0<\/p>\n<p>A government decision to abruptly roll back subsidies for renewable energy from January has hit power producers, cutting payments from Vietnam\u2019s state utility EVN for electricity they supply to the grid. Developers allege this is a breach of contracts signed from 2017 for a period of 20 years.<\/p>\n<p>The cancellation of subsidies \u201cmay lead to force majeure, meaning that power plants may have to stop supplying electricity to the national grid, seriously affecting the security of power supply in 2025 and the following years\u201d, EVN warned in a letter in May to Vietnam\u2019s ministry of industry and trade seen by the Financial Times.<\/p>\n<p>In a follow-up letter to the ministry in July, EVN reiterated its concerns about impacts to national power supply, \u201cespecially in the coming period when the country sets a high economic growth target\u201d. <\/p>\n<p>In the letters, which have not been previously reported, EVN said lower purchasing prices would restrict the developers\u2019 cash flow, which it warned would result in delayed maintenance, missed loan obligations or even bankruptcies. The letters summarised meetings with foreign investors and submissions from business groups.\u00a0<\/p>\n<div class=\"n-content-layout\" data-component=\"flourish\" data-component-id=\"24239410\" data-component-type=\"flourish-in-article\">\n<figure class=\"n-content-picture n-content-layout__container\"><a href=\"#24239410\"><picture data-asset-type=\"flourish\" data-flourish-id=\"24239410\" data-flourish-type=\"visualisation\">\n<div id=\"24239410\" class=\"cp-message o-message o-message--inform o-message--notice\" data-o-component=\"o-message\">\n<div class=\"o-message__container\">\n<div class=\"o-message__content\">\n<p class=\"o-message__content-main\">Some content could not load. Check your internet connection or browser settings.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p><\/picture><\/a><\/figure>\n<\/div>\n<p>The withdrawal of the subsidies could harm Vietnam\u2019s appeal as a destination for foreign investment, clouding its economic outlook at the same time that it begins <a href=\"https:\/\/www.ft.com\/content\/e5f23433-e435-4c81-88c3-4285b12f0d6a\" data-trackable=\"link\">grappling with higher US tariffs<\/a>.<\/p>\n<p>A total of 173 solar and wind projects, built at a cost of $13bn, would be affected by the policy change. Of those, 75 were backed by foreign investors, mainly from south-east Asia including Acen from the Philippines and Thailand\u2019s Super Energy and B Grimm Power.<\/p>\n<p>\u201cThey [Vietnam] have demonstrated without a question that the contract from the main offtaker is not reliable,\u201d said a foreign investor in the solar industry who asked to remain anonymous.\u00a0\u201cThere is not a chance in hell of any serious funds being attracted into Vietnam\u2019s power sector.\u201d<\/p>\n<p>EVN warned the ministry that foreign investors could see the policy change as a breach of their power purchasing agreements and take legal action against the state utility, including international arbitration, if Vietnam persists with the reduced subsidies.<\/p>\n<p>\u201cIn case of reduced confidence in the stable investment environment in the energy sector, foreign investors as well as capital suppliers will shift their investment to other countries in the region,\u201d EVN wrote in July.<\/p>\n<p>The dispute underscores the challenges to Vietnam as it seeks to rapidly built out infrastructure to serve the expansion of power-hungry manufacturing sector.<\/p>\n<div class=\"n-content-layout\" data-component=\"flourish\" data-component-id=\"24241289\" data-component-type=\"flourish-in-article\">\n<figure class=\"n-content-picture n-content-layout__container\"><a href=\"#24241289\"><picture data-asset-type=\"flourish\" data-flourish-id=\"24241289\" data-flourish-type=\"visualisation\">\n<div id=\"24241289\" class=\"cp-message o-message o-message--inform o-message--notice\" data-o-component=\"o-message\">\n<div class=\"o-message__container\">\n<div class=\"o-message__content\">\n<p class=\"o-message__content-main\">Some content could not load. Check your internet connection or browser settings.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p><img decoding=\"async\" src=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fpublic.flourish.studio%2Fvisualisation%2F24241289%2Fthumbnail%3FcacheBuster%3D973688?source=cp-content-pipeline&amp;fit=scale-down&amp;quality=highest&amp;width=2626&amp;dpr=1\" alt=\"\"\/><\/picture><\/a><\/figure>\n<\/div>\n<p>In 2023, factories were hit with rolling blackouts in northern Vietnam during the peak summer season, as a drought affected hydropower. The government has since then accelerated development of power generation and transmission lines. <\/p>\n<p>Last year, it also allowed big companies to purchase power directly from producers rather than rely on the grid, and EVN <a href=\"https:\/\/www.ft.com\/content\/261bd603-e112-44dc-b2e1-f97a7db54353\" data-trackable=\"link\">asked users to be economical<\/a> to avoid shortages.\u00a0\u00a0<\/p>\n<p>The current dispute stems from a 2017 policy under which EVN would buy renewable energy at above-market prices to supply the national grid. The incentives were critical to the rapid expansion of renewables in Vietnam, <a href=\"https:\/\/www.ft.com\/content\/5af9367e-821c-4907-9f27-1371a928371e\" data-trackable=\"link\">which now leads south-east Asia<\/a> in clean energy adoption.\u00a0<\/p>\n<p>However, Hanoi decided to scrap the favourable pricing scheme after an audit found some of the projects were missing a certificate showing construction had been completed. Energy developers allege this documentation was not required when the purchase agreements were signed.\u00a0Since January, producers have been paid as little as half of what they received previously for power.<\/p>\n<aside aria-labelledby=\"aside-label\" class=\"n-content-recommended--single-story n-content-recommended--inset\" data-component=\"recommended\">\n<p class=\"n-content-recommended__title o3-type-body-highlight\">Recommended<\/p>\n<div class=\"o-teaser o-teaser--article o-teaser--small o-teaser--stacked o-teaser--has-image o-teaser--opinion js-teaser\" data-id=\"f50e4da0-ae4d-4ee8-b5bc-8059ba3113cd\">\n<div class=\"o-teaser__image-container js-teaser-image-container\"><a href=\"https:\/\/www.ft.com\/content\/f50e4da0-ae4d-4ee8-b5bc-8059ba3113cd\" data-trackable=\"image-link\" data-trackable-context-story-link=\"image-link\" tabindex=\"-1\" aria-hidden=\"true\"><\/p>\n<div class=\"o-teaser__image-placeholder\" style=\"aspect-ratio:2106\/1184\"><img decoding=\"async\" class=\"o-teaser__image\" src=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fwww.ft.com%2F__origami%2Fservice%2Fimage%2Fv2%2Fimages%2Fraw%2Fhttps%253A%252F%252Fd1e00ek4ebabms.cloudfront.net%252Fproduction%252F7a04b8b9-6e07-4aac-936a-45996e825c0b.jpg%3Fsource%3Dnext-article%26fit%3Dscale-down%26quality%3Dhighest%26width%3D700%26dpr%3D1?source=next&amp;fit=scale-down&amp;dpr=2&amp;width=240\" alt=\"Vietnam\u2019s Communist Party General Secretary To Lam\"\/><\/div>\n<p><\/a><\/div>\n<\/div>\n<\/aside>\n<p>The utility has aked the ministry to apply the rollback retroactively, but only for the period when producers lacked the inspection documentation. This means investors would have to return part of the funds they received for that period, but not for the rest of the contract. The proposal is intended to avoid lawsuits and safeguard Vietnam\u2019s investment reputation.<\/p>\n<p>More than 40 foreign and Vietnamese companies with a combined capacity of 6.38 gigawatts have petitioned the government to review the decision.<\/p>\n<p>\u201cThe current situation poses serious and immediate risks to investor confidence, financial stability, and Vietnam\u2019s long-term energy and climate objectives,\u201d the investor group said in a May letter to the government.\u00a0\u00a0<\/p>\n<p>EVN and the ministry of industry and trade did not respond to requests for comment. Super Energy and Acen declined to comment. B Grimm did not respond to a request for comment.<\/p>\n<p><em>Data visualisation by Haohsiang Ko in Hong Kong<\/em><\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/dc3ea035-bdeb-4cb8-978f-834cb958b61e\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":6,"featured_media":34359,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-34358","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/34358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34358"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/34358\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/34359"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}