Khe Bo Hydropower Project
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Host party(ies) Viet Nam
Methodology(ies) ACM0002 ver. 12
Standardised Baselines N/A
Estimated annual reductions* 251,401
Start date of first crediting period. 01 Aug 11
Length of first crediting period. 10 years
DOE/AE Bureau Veritas India Pvt. Ltd.
Period for comments 17 Feb 11 - 18 Mar 11
PP(s) for which DOE have a contractual obligation Viet Nam Power Development Joint Stock Company (VN POWER D.J.S.C)
The operational/applicant entity working on this project has decided to make the Project Design Document (PDD) publicly available directly on the UNFCCC CDM website.
PDD PDD (2156 KB)
Local stakeholder consultation report: N/A
Impact assessment summary: N/A
Submission of comments to the DOE/AE Compilation of submitted inputs:
Regarding the CDM activity of 100MW Khe Bo Hydropower Project, I have some comments:

National policy:
Khe Bo HPP developed by Vietnam Power Development Joint Stock Company with the major share of Electricity of Vietnam (EVN) for 85.7% from EVN.
The Khe Bo project identified as the critical national power generation project in the Decision No.1793/TTg-CN dated 07/11/2006 to supply the electricity rather than profit making, why the project claimed for CDM activity under conditions:

-	The project decided to be invested by Electricity of Vietnam (EVN), EVN is the sole state own entity to manage all the electricity distribution from generation, purchasing, transmission and sale, EVN was approved to use ODA, Governmental bond, budget funding to develop the power generation to ensure of meeting the electricity demand of the country of Vietnam which is currently serious shortage
-	EVN is the only buyer for all power projects in Vietnam, it is favorable conditions for Khe Bo HPP to utilize EVN’s infrastructure of grid connection point, transmission line.

The Priority of EVN can be verified by the Governmental Official Portal 
http://www.chinhphu.vn/portal/page?_pageid=517,34682326&_dad=portal&_schema=PORTAL&_piref517_34682358_517_34682326_34682326.docid=94635&_piref517_34682358_517_34682326_34682326.detail=1

Project IRR

CDM developer requested to clarify the difference in the PDD and the public website of Vietnam Power Development Joint Stock Company for investors:

In the public web state of Khe Bo HPP:

•	Economic Indicator: B/C = 1.27, NPV = 470.3 Bill. VND, FIRR = 12.8%
•	Financial Indicator: B/C = 1.14, NPV = 277.1 Bill. VND, FIRR = 12.9%
•	Project Cost: 2,453 Bill. VND

In the PDD

•	Project Cost: 2,146.928 Bill. VND
•	Project IRR with CDM 12.39%
•	Project IRR without CDM 10.71%

Why the figure applied in the PDD which is the IRR was lower than the public website of the Company stated, the Company stated the information followed joint stock Company’s law which used for investors, it was the law broken without shareholders meeting to revise the project IRR with stated information.

The published data to be obtained at 
http://vnpd.com.vn/index.php/dau-tu-phat-trien/thuy-dien-khe-bo/66-gii-thiu-d-an-thy-in-khe-b


Feed in Tariff

In the PDD, section B.5, the PDD developer stated that “the IRR is calculated using a fixed electricity price of 4.1 US cent/kWh, according to national regulations and guide rules. The price will be determined by a Power Purchase Agreement (PPA) between the PO and EVN. Many Hydropower projects in Vietnam were executed with an agreed PPA showing lower tariff than the one of the proposed Project, i.e. 4.1 US cent/kWh. It is unlikely that EVN would agree to sign a PPA with a higher tariff, based on historical data and PPA available” however, in the table B.5.2 in the PDD stated “The tariff assumed in the FSR investment analysis is 647 VND/kWh (approximately 4.1 US cent/kWh), which is consistent with the tariff set by the Decision 2014/QD-BCN Ministry of Industry for similar projects (i.e. 2.5 ÷ 5.0 US cent/kWh for dry season and 2.5 ÷ 4.7 US cent/kWh for rainyseason)”

For conservative calculation for CDM project, in case of the project is not to go in a PPA, the highest tariff shall be applied followed the regulation of the Government of Decision 2014/QD-BCN issued by Ministry of Industry that 5 USD cent /Kwh for dry season and 4.7 USD cent /Kwh for rainy season, moreover, Khe Bo HPP is the EVN invested project, so the tariff applied for the project decided by EVN, several EVN projects got a higher tariff of 4.1 cent USD/kwh


Common Practice  

The PDD developer claimed for a distinction between the proposed project and Se San 3 and Se Sen 3A based on investment, however, the link provided by the PDD developer shown that Se San 3 and Se Sen 3A started in 2002/2003 and the proposed project started in 2007, as the PDD developer claimed for inflation rate 8.35% and 23.12% for the year 2007 and 2008 in the PDD, page 17, therefore, the comparison of investment cost of the year 2002/2003 compared to 2007 was not correct. 


Among the identified similar projects “Project 5 (Quang Tri), 6 (Plei Krong), 7 (A Vương), 8 (Song Ba Ha) and 10 (Buon Tua Sah)” are similar environmental investment and invested by EVN but were in operation without CDM, the proposed project is the same structure under EVN, what is the distinction, in the situation that EVN can use Governmental bond, ODA and public fund…for all their projects

Social impact

The PDD was not transparent to describe the social impact, the project cause a serious impact to the community, the project took over 100.96 Km2 of land, there were seven communes and towns to be removed including 0.9 km national road No. 7, the resident to be resettled up to 3,299 people.

Lan Huong
Climate Change Researcher
Submitted by: Lan Huong


The comment period is over.
* Emission reductions in metric tonnes of CO2 equivalent per annum that are based on the estimates provided by the project participants in unvalidated PDDs