ARLINGTON, Va.--(BUSINESS WIRE)--The AES Corporation (NYSE: AES) today announced that its subsidiary, AES VCM Mong Duong Power Company Limited (AES VCM), signed a power purchase agreement (PPA) with Electricity Vietnam (EVN), the state-owned power company, for Mong Duong II, a 1,200 MW coal-fired power plant. In support of this agreement, AES VCM has also entered into a supply agreement with the Vietnam National Coal-Mineral Industries Group (Vinacomin), the state-owned coal and mineral company, to supply locally sourced fuel to the facility, which will be located in the Quang Ninh province. Both the PPA and fuel supply agreements are for a 25-year term.
At this time, all local approvals, including environmental permits have been secured for the Mong Duong II project. AES VCM is also making progress on financing and Engineering, Procurement and Construction (EPC) agreements. AES VCM expects to finalize these outstanding agreements and reach financial close during the first half of 2011, at which point AES will invest its equity portion of approximately $400 million. The project is expected to achieve commercial operations by the end of 2014. AES VCM currently has a 90 percent ownership interest in the Mong Duong II project, while Vinacomin owns the remaining ten percent. Under the PPA, capacity payments and the majority of operations and maintenance payments will be denominated and paid in U.S. dollars. The PPA allows for a fuel cost pass through, which will be denominated in local currency.
“Expanding into Vietnam is a key part of our strategy of pursuing new opportunities in Asia, where growth in demand for electricity is projected to outpace much of the rest of the world. In keeping with AES’ heritage of leveraging our safe, efficient operations in new markets, the 1,200 MW Mong Duong II power plant will provide a critical source of affordable power to Vietnam as it grows and expands in the global economy,” said Paul Hanrahan, President and Chief Executive Officer of AES Corporation. While AES currently operates nine percent (3,725 MW) of its global portfolio in Asia, fully 60 percent (22,850 MW) of its development pipeline is located there.
According to estimates by EVN and published reports, demand for electricity in Vietnam in the last five years increased an average of 13.5 percent each year and is projected to grow an average of 15 percent annually over the next decade. Given historical shortages of suppliers, demand for power has well outpaced Gross Domestic Product growth during this same period, projected at over six percent this year, according to the Asian Development Bank.
The AES Corporation (NYSE: AES) is a Fortune 500 global power company with generation and distribution businesses. Through our diverse portfolio of thermal and renewable fuel sources, we safely provide affordable and sustainable energy in 29 countries. Our workforce of 27,000 people is committed to operational excellence and meeting the world's changing power needs. Our 2009 revenues were $14 billion and we own and manage $40 billion in total assets. To learn more, please visit www.aes.com.
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This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, those related to future earnings, growth and financial and operating performance. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES’ current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to, our accurate projections of future interest rates, commodity price and foreign currency pricing, continued normal levels of operating performance and electricity volume at our distribution companies and operational performance at our generation businesses consistent with historical levels, as well as achievements of planned productivity improvements and incremental growth investments at normalized investment levels and rates of return consistent with prior experience.
Actual results could differ materially from those projected in our forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in AES’ filings with the Securities and Exchange Commission, including, but not limited to, the risks discussed under Item 1A “Risk Factors” in AES’ 2009 Annual Report on Form 10-K. Readers are encouraged to read AES’ filings to learn more about the risk factors associated with AES’ business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Any Stockholder who desires a copy of the Company’s 2009 Annual Report on Form 10-K filed on or about February 25, 2010 with the SEC may obtain a copy (excluding Exhibits) without charge by addressing a request to the Office of the Corporate Secretary, The AES Corporation, 4300 Wilson Boulevard, Arlington, Virginia 22203. Exhibits also may be requested, but a charge equal to the reproduction cost thereof will be made. Stockholders may also obtain a copy by visiting the Company’s website at www.aes.com.