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(Bloomberg) — Foreign investors have urged Vietnam’s government to resolve a long-running dispute over payments to solar and wind power projects, warning that producers may pursue legal action if agreed terms are not honored.
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A letter sent to the government on Thursday sets out investor concerns over reduced payments under power purchase agreements tied to projects with a combined capacity of 12 gigawatts. If obligations are not met “sellers may seek to enforce remedies including pursuing dispute resolution in Vietnam or other jurisdictions,” the letter, which is signed by five chambers of commerce, states.
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The dispute stems from a government decision in late 2024 to review preferential rates for electricity generated by some solar and wind farms, and proposing to apply reduced payments retroactively after an eligibility review. That prompted a series of petitions sent by investors linked to 173 renewable projects alleging breach of contract and warning of bankruptcy risks.
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The Southeast Asian nation attracted massive interest in renewables projects after the government required state-owned Vietnam Electricity Group, known as EVN, to buy clean power at fixed rates via the Feed-in-Tariff system, first introduced in 2017, which supercharged solar and wind investment. Thanks to the generous rates, the country scaled up its solar and wind capacity but it involved the utility paying a higher-than-market price for power.
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Vietnam’s government and utility EVN didn’t immediately respond to requests for comment.
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The move comes as Vietnam is grappling with higher fuel prices and risks of shortages due to the war in the Middle East disrupting global energy supplies. The government has dipped into its emergency fuel fund to stabilize gas prices but warned that if the conflict continues into April the “market may face more difficulties.”
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The situation with the affected renewable projects now risks resulting in financing defaults and year-end corporate reporting that could highlight substantial losses tied to multi-billion dollar investments in the sector, warns the letter. That could deter further foreign investment.
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“All stakeholders in Vietnam’s energy market understand the significance of these implications,” the letter says, urging authorities to work toward an effective and amicable resolution of the disputes.
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—With assistance from Nguyen Xuan Quynh.
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