Malaysian bank under fire for financing Vietnamese coal plant
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While Malaysia commits to phasing out coal power domestically, a Malaysian government-owned development bank has agreed to finance the Song Hau 2 coal plant in Vietnam. Consequently, Exim Bank is now under scrutiny for its role in funding this new coal plant, Eco Business, an Asia-Pacific based media organisation reported.
The 2,120 MW Song Hau 2 project in southern Vietnam, which had faced over a decade of construction delays due to financing challenges, can now move forward after securing a $980 million loan from Export-Import Bank of Malaysia (Exim Malaysia), a government-owned development bank.
The agreement to fund the $3 billion coal plant in Hau Giang province has faced criticism for undermining Malaysia’s climate commitments and jeopardizing Vietnam’s $15 billion Just Energy Transition Partnership (JETP) climate aid package.
Vietnam committed to reducing its reliance on coal as part of its JETP agreement with wealthy nations in 2022. This included a pledge to cap its coal-powered generation capacity at 30.2 gigawatts by 2030.
Christina Ng, the managing director and co-founder of Energy Shift Institute, an Australia-based energy think tank, told Eco Business that the project’s construction could torpedo the funding deal.
Christina added that funding the Song Hau 2 project highlights inconsistency in the Malaysian government’s approach to energy investments and financing, both domestically and internationally, “This is particularly concerning given the increased global scrutiny on fossil fuel financing.”
Read more: Malaysia announces plans to fully retire CFPPs by 2044
Vietnam is Southeast Asia’s leader in adding renewable energy capacity, yet it remains heavily reliant on coal to meet its rapidly growing energy demand. Song Hau 2 is one of 16 coal plants included in Vietnam’s Power Development Plan 2021-2030, which aims to generate an additional 30 gigawatts of coal power.
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