Vietnam was in the top five among 34 countries ranked for private participation in infrastructure (PPI) projects in the first half of this year, the World Bank said in a report released earlier this week.

Workers install solar panels at a solar power plant in the south-central coastal province of Ninh Thuan

The first-half period saw a modest increase of 7% in PPI projects in developing countries, showing signs of a continued recovery. However, this is still 13% lower than the 10-year average, according to the global lender.

Its latest report, titled, “H1 2018 Participation in Infrastructure,” analyzes private investment commitments in 34 countries across the fields of energy, transport, and communication technologies, as well as water infrastructure, up to a value of US$43.5 billion across 164 projects.

East Asia and the Pacific emerged as the largest recipient of private investments. Vietnam made its debut in the top five PPI countries, while India and Turkey rejoined the list, which also included China and Brazil. These countries accounted for 66% of the global total, 10% higher than in 2017 but similar to previous five-year averages.

Commercial lenders financed almost half of the first-half investments, and local financing also increased. Of the total commercial debt of US$11.6 billion, Vietnam accounted for more than 10%.

The country also accounted for some 8% of global investment commitments, with a total of US$3.4 billion across 10 projects. All the projects involved electricity generation, of which nine used renewable energy sources and one was a US$1.9 billion coal megaproject.

Vietnam’s commitment to reducing its reliance on coal-fired power and to addressing environmental issues has resulted in an increased focus on investment in the renewable-energy sector.

Also instrumental could be the fact that the current higher feed-in-tariff regime, referring to the price of electricity sold to the national grid, will not be applicable from next year.

An April 2017 decision of Prime Minister Nguyen Xuan Phuc requires State utility Vietnam Electricity Group (EVN) to purchase all output from solar power projects connected to the national grid at VND2,086, or 9.35 U.S. cents, per kWh, excluding value-added tax.

Electricity purchase contracts with EVN are set to last 20 years once the commercial operations of these projects begin. The decision, which came into effect in early June last year, will expire in late June next year.

If certain solar power projects fail to start commercial operations by then, their electricity purchase prices may fall below 9.35 U.S. cents per kWh. As stated in a July 2018 notice from the Government Office, the PM is determined not to extend the execution period of the decision.

SGT