We, the undersigned 128 organizations from 39 countries call upon the Japan Bank for International Cooperation (JBIC) to reverse its decision to provide financing for the Vung Ang 2 coal-fired power plant project in Vietnam. We also call upon all companies involved to withdraw from the project.
On December 28, 2020, the publicly-funded financial institution JBIC signed a loan agreement for up to approximately US $636 million (approx. 60 billion yen) for Vung Ang 2. Private sector financial institutions believed to be participating in co-financing include MUFG Bank, Mizuho Bank, Sumitomo Mitsui Banking Corporation (SMBC), and Sumitomo Mitsui Trust Bank (SMTB). Mitsubishi Corporation, Chugoku Electric Power Company, and Korea Electric Power Corporation are believed to be investing in the project.
Vietnam already has an electrification rate above 99%, and the price of renewable energy there is lower than coal power. In September 2020, the Institute for Energy Economics and Financial Analysis (IEEFA), a US think tank, identified financial risks for the state utility Electricity of Vietnam (EVN), which would purchase the electricity. One risk factor is the electricity purchase contracts that would require EVN to guarantee power purchases at fixed prices from independent power producers (IPP) that generate electricity from coal. As a means of limiting its debt risk EVN might be able to raise electricity rates, but citizens forced to bear the burden would inevitably be opposed; thus, it has been pointed out that this means should be revisited, in the light of the current socio-political situation in Vietnam and the perspective of an economic recovery from the impacts of COVID-19. A pre-feasibility assessment by a Korean government think tank found that the project represented a loss of 158 million dollars (approx. 17 billion yen), and if the loss were to be realized, or if electricity prices had to be raised, the ultimate burden would fall on the people of Vietnam.