HANOI (Reuters) -Vietnam’s state power utility has cut previously agreed subsidised prices it pays for electricity from some solar and wind farms which now risk defaulting on their debts with banks, according to an investors’ petition seen by Reuters.
The document, dated May 16 and sent to Vietnam’s top authorities, follows a first letter in which most of the same signatories warned of billions of dollars of investment at risk because of retroactive changes to subsidies implemented by Vietnamese authorities even as they target a massive expansion of renewables capacity.
Starting with January invoices, a subsidiary of Vietnam’s power utility EVN “unilaterally withheld a portion of its payments by applying a provisional tariff of its own proposal,” the document said.
“This has caused us to breach commitments to banks and both local and international lenders, face the risk of default under pressure of monthly debt repayments, and suffer cash shortages,” it added.
Among the 16 foreign signatories are private equity fund Dragon Capital, the Vietnamese subsidiary of Philippines’ ACEN energy group, and investors from Thailand, Portugal, the Netherlands, South Korea, Singapore and China. Dozens of other Vietnamese projects also signed the letter.
In recent years, the Southeast Asian country has experienced a boom in renewable energy investments driven by generous feed-in tariffs (FiTs), under which the state committed to buying electricity for 20 years at above-market prices, effectively subsidising producers.
However, amid allegations of abuses in accessing the FiTs and increasing losses for EVN from the subsidy programme, authorities have proceeded to freeze or cut some subsidies.
EVN had no immediate comment on the second petition but it has told Reuters in recent weeks that preferential prices could not be continued for projects that violated regulations.
It did not specify whether rules were changed retroactively and which projects were in breach of regulations.
(Reporting by Francesco Guarascio; Editing by Hugh Lawson)
