November 8, 2019 / 12:39 PM / 8 days ago

AES Corp to build $1.7 billion gas-fired power plant in Vietnam

HANOI (Reuters) - AES Corp. (AES.N) on Friday signed a memorandum of understanding with the Vietnamese government to build a $1.7-billion gas-fired power plant in Vietnam, the U.S. Embassy in Hanoi said.

U.S. Secretary of Commerce Wilbur Ross attends the 25th anniversary of the establishment of the American Chamber of Commerce in Vietnam, at a hotel in Hanoi, Vietnam November 8, 2019. REUTERS/Kham

The deal for building the 2.2-gigawatt Son My 2 Combined Cycle Gas Turbine Power Plant was signed in Hanoi in the presence of U.S. Secretary of Commerce Wilbur Ross, the embassy said in a statement.

Vietnam wants to import more U.S. goods to help narrow its trade surplus with the United States following threats by President Donald Trump to impose tariffs on its products and to label the country a currency manipulator.

The power plant is scheduled to start commercial operations in 2024, according to the statement.

AES previously received approval from the Vietnamese government to build a $1.4 billion LNG terminal near the power plant in Vietnam’s southern-central province of Binh Thuan.

Ross is leading a delegation of senior government officials and executives from 17 leading U.S. companies to Hanoi, as part of a larger trade mission to the Indo-Pacific region with stops in Thailand and Indonesia.

On Friday he witnessed the signing of a $1-billion multi-year engine service agreement between Pratt & Whitney and Vietnam Airlines HVN.HM and a production sharing contract between Murphy Oil (MUR.N), Vietnam Oil and Gas Group, PVEP and SK Innovation (096770.KS) for Block 15-2/17 offshore Vietnam.

Vietnam is at risk of being labeled a currency manipulator by the U.S. because of its trade surplus with the country, a highly positive current account balance and because its central bank has been quite active in terms of net foreign exchange purchases.

The U.S. is Vietnam’s largest export market. Its trade surplus with the U.S. widened to $33.96 billion in the first nine months of this year from $25.46 billion a year earlier, according to Vietnam’s customs data.

Vietnam imported its first batches of U.S. West Texas Intermediate (WTI) crude oil earlier this year, and is considering importing coal from the U.S. for power generation.

Reporting by Khanh Vu; Editing by Alison Williams and Kirsten Donovan

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