Challenges for LNG power need to be resolved immediately

Mr. Hoang Quang Phong, Executive Vice President of the Vietnam Chamber of Commerce and Industry (VCCI)

Speaking at the forum "Realizing the goal of LNG power development under National Power Development Plan VIII" held on December 7, 2023 by Business Forum Magazine under the direction of VCCI, Mr. Hoang Quang Phong, Executive Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), noted that Vietnam is recognized by the international community for being among the few nations that have quickly fulfilled their commitments to combat climate change under the terms of the Paris Agreement.

It is evident that the Party and State have made a sustainable energy transition a priority in recent years. Vietnam has concentrated on the rapid development of gas-fired power plants, as stated in Resolution No. 55-NQ/TW, dated February 11, 2020, by the Politburo on the strategic orientation of the country's energy growth until 2030, with a vision until 2045.  

The objectives of the National Power Development Plan VIII were to: 13 LNG power plants to be put into service; convert 18 GW of coal power to 14 GW of LNG power and 12–15 GW of renewable energy sources by 2030. By 2030, the share of domestic gas and liquefied gas thermal power sources in Vietnam's power structure would be the highest at 37,330 MW, or 24.8% of the country's total power source capacity.

LNG power development helps to minimize greenhouse gas emissions and ensure a stable power supply. This is a standby source that will kick in when the percentage of renewable energy sources in the source structure rises. It operates continuously and doesn't rely on natural resources like solar or wind power.

In Mr. Hoang Quang Phong’s view, LNG thermal power plants are also a way to reduce reliance on coal-fired power plants, helping Vietnam's power industry develop greener and contributing to implementing commitments at the COP26 conference.

Nevertheless, in addition to potential, Vietnam's development of LNG power has encountered numerous challenges with regard to investment, construction, operation management, and policymaking.

First, we must first import all of this fuel. While Vietnam has not yet developed a comprehensive legal framework for LNG power projects, nor does it have a set of technical standards pertaining to the design, building, and operation of import infrastructure, import activities must adhere to worldwide LNG trade procedures.

Secondly, we lack expertise in creating LNG power plants, which involves building and running LNG terminals with high technical specifications, stringent safety regulations, and substantial financial outlays.

Third, provinces and cities' sectoral plans and land use plans do not align with the National Power Development Plan VIII in terms of planning, which might delay the completion of investment licensing processes and project advancement.

Forum "Realizing the goal of LNG power development under National Power Development Plan VIII" 

Fourth, there are numerous obstacles in the way of project finance because LNG power projects demand substantial financial outlays as well as cutting-edge technology. There is currently no tax or fee incentive mechanism to entice investors to participate in LNG power project development; instead, the projects must adhere to standard investment procedures.

“There won't be much time left between now and 2030 to complete the objectives and responsibilities outlined in the National Power Development Plan VIII. Therefore, cooperation from all levels and sectors is needed to promptly remove the above difficulties and obstacles in order for liquefied gas projects to be implemented on schedule", said Mr. Hoang Quang Phong.