HANOI: More than two dozen foreign and Vietnamese investors, including Adani Green Energy, have warned Vietnam's plans to retroactively change rules on subsidised prices for wind and solar energy could affect more than US$13 billion of investments.
In a letter to Vietnamese leaders dated March 5 and reviewed by Reuters, the investors expressed "deep alarm" about the possible end of favourable energy tariffs, noting the policy change could undermine broader financial stability and erode confidence in Vietnam at a time when the country plans to significantly expand its renewables capacity.
Among the 28 signatories are private equity fund Dragon Capital, the Vietnamese subsidiary of Philippines' ACEN energy group, and investors from Thailand, the Netherlands, Singapore and China.
In recent years, the South-East Asian country experienced a boom in renewable energy investments driven by generous feed-in tariffs, under which the state committed to buying electricity for 20 years at above-market prices.
However, the high tariffs increased losses for Vietnam's state-owned power utility EVN, the only buyer of the generated electricity, and led to an increase in power prices for households and factories.
Authorities have repeatedly tried to reduce the high tariffs. Now they are considering a retroactive review of the criteria set for accessing the feed-in tariffs, according to the investors' letter, even after the projects are producing power.
"Such a move could result in equity write-offs of nearly 100% for the affected projects, jeopardising approximately over $13 billion in investment," the letter said.
The letter did not clarify if all of the funds had been spent yet, and it was not clear how and when Vietnam intended to review existing rules. Vietnam's industry ministry and EVN did not immediately respond to requests for comment.
Investors said in the letter that EVN was already delaying payments or only partially paying for the electricity generated by renewable projects "without clear justification".
As a result, "multiple projects (are) facing loan default to both local and international lenders," the letter said, warning that a permanent revision or end of agreed tariffs "risks undermining national banking stability and eroding confidence in Vietnam's regulatory framework."
This comes as Vietnam is planning to greatly expand its capacity for solar and wind energy generation under a revised draft power plan for this decade seen by Reuters.
Under the plan's base scenario, installed capacity from wind and solar farms would exceed 56 gigawatts by 2030, nearly one-third of the total planned installed capacity from all sources, including fossil fuels.
Of the projects that could be hit by the retroactive reform, those funded by foreign investors have a combined capacity of nearly 4 GW, almost exclusively in solar energy, with an aggregate value of $4 billion, according to the letter. - Reuters
