The Hanoitimes - IFC, a member of the World Bank Group, and the Singapore-based Armstrong S.E. Clean Energy Fund have announced investments in the Gia Lai Electricity Joint Stock Company (GEC).
IFC and Armstrong, with a combined stake of 36 percent, will take a 16 and 20 percent equity stake in GEC, respectively. For both it is their first investment in Vietnam’s power sector. The investment will help the company expand its hydropower portfolio and invest in other renewable energy segments, such as wind and solar power.
Based in the Central Highland province of Pleiku, GEC joined the Thanh Thanh Cong Group in 2013. With charter capital of 715 billion VND (34 million USD), GEC was one of the largest private sector hydropower players in Vietnam, with 84.4 MW of installed capacity across 15 run-of-the-river small-scale hydro power plants.
Leaders of Gia Lai Electricity JSC, International Financial Company, Armstrong S.E. Clean Energy Fund and Thanh Thanh Cong Group sign the strategic partnership in HCM City
Le An Khang, CEO of GEC, said the investment will help the company become a leader in renewable energy and provide sustainable alternatives to fossil fuel-based power generation in Vietnam.
Khang added that the investment will boost local confidence in the hydropower sector’s potential and help attract more international investors.
Local electricity consumption has outpaced the country’s economic growth rate two-folds over the past few years.
With an expanding renewable energy portfolio, GEC will contribute to the government’s goal of increasing Vietnam’s installed power capacity by 14 percent per annum between 2015 and 2030.
Andrew Affleck, managing partner of Armstrong, said the fund would share its knowledge and experience of developing and constructing multiple renewable projects in neighbouring South East Asian markets to help GEC build a leading position in Vietnam.
By developing sustainable hydropower and other renewable energy sources, GEC will help the country meet its estimated 10 percent annual increase in power demand, diversify its energy mix and reduce its reliance on imported fossil fuels.
Hyun-Chan Cho, IFC head for Infrastructure and Natural Resources for Asia Pacific said, the IFC investment "is an important step to encourage other investors to tap into the rich potential of Vietnam’s green energy sector, where participation by foreign investors is still modest.”
He added that IFC’s global industry knowledge will help transform GEC into a role model for other emerging renewable energy players in Vietnam by showcasing best industry practices.
Hydroelectricity is the world’s largest source of renewable energy and accounts for one-fifth of its electricity supply from all sources. Over the last decade, IFC has invested more than 1 billion USD in 75 hydropower projects in 25 developing countries.