Vietnam's prime minister approved a long-awaited power plan for this decade that needs $134.7 billion of funding for new power plants and grids, the government said late on Monday, in a move that may help unlock billions of dollars of foreign investment.
The plan, known as PDP8, is aimed at ensuring energy security for the Southeast Asian country while it begins the transition from its current heavy reliance on coal to becoming carbon-neutral by mid-century.
Amid internal squabbles and work on complex reforms, the plan has been delayed for more than two years, and has seen a dozen of draft versions before the approval by Prime Minister Pham Minh Chinh, which now needs the formal green light from the rubber-stamp parliament, possibly this month, before its final adoption.
The plan is important to unlock an initial investment of $15.5 billion in green-transition funds pledged to Vietnam in December by the Group of 7 (G7) nations and other wealthier countries. Half of the funds will come from the public sector and the rest from private investors.
After the deal, negotiators have struggled for months to progress on preliminary work to allocate the funding, multiple officials told Reuters, as Vietnam officials maintained their reticence to accept loans, which are by far the biggest component of the promised public funds.
One diplomat from the G7 donors' group told Reuters on Tuesday the approval was an important step, necessary to unlock funding for renewable projects, especially offshore wind. It was however not completely in line with G7 goals, the diplomat added, as the country will still heavily rely on coal this decade.
To complete its transition to carbon-neutrality with total phase-out of coal by 2050, the government estimates it needs a whopping $658 billion, of which one-fifth would have to be disbursed this decade.
The industry ministry, which prepared the document, said in a statement late on Monday that, under the plan, half of office buildings and homes in Vietnam would be powered by rooftop solar panels by 2030. The country would also aim to generate green energy for exports, with a target of 5-10 gigawatts (GW) by 2030.
The statement did not provide full details of the plan.
A draft of the PDP8, dated May 10 and seen by Reuters, showed the plan would more than double the country's power generation capacity to 158 GW by 2030 from 69 GW at the end of 2020.
Power plants using domestic gas and imported liquefied natural gas (LNG) would be the main source of the country's power generation mix by 2030, accounting for 37.33 GW, or 23.6%, according to the draft, with LNG accounting for the lion's share.
Coal would still account for 19% of the mix by 2030, followed by hydropower with 18.5%, wind energy with 17.6% and solar power 13.0%, according to the draft.
The ministry did not respond to a request for comment about the draft.